NOTE AND WARRANT
PURCHASE AGREEMENT
DATED MARCH 8, 0000
XXXXXXX
XXX/XXXXXXX XXXXXXXX XXX, L.P.,
EGL EQUITY PARTNERS III, L.P.,
EGL EQUITY OFFSHORE PARTNERS III, L.P.,
AND POINTE COMMUNICATIONS CORPORATION
TABLE OF CONTENTS
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Page
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1. Authorization and Closing 1
1A. Authorization of the Notes and Warrants 1
1B. Issuance of the Notes and the Warrants 1
1C. The Closing 1
2. Covenants 1
2A. Financial Statements and Other Information 1
2B. Inspection of Property 2
2C. Board of Directors Representation 3
2D. Current Public Information 3
2E. SBIC Regulatory Provisions 3
2F. Reservation of Common Stock 4
2G. Public Disclosures 4
2H. Preemptive Rights 5
2I. Taxes 5
2J. Licenses 6
2K. Settlement Agreement 6
2L. General Covenants 6
3 Representations and Warranties of the Company 6
3A. Organization, Corporate Power and Licenses 6
3B. Authorization; No Breach 7
3C. No Material Adverse Change 7
3D. Small Business Matters 7
3E. Xxxxxxxxxx 0
0X. Reports with the Securities and Exchange Commission 8
3G. Licenses 8
3H. Use of Proceeds 8
4 Definitions 8
4A. Definitions 8
5 Miscellaneous 9
5A. Expenses 9
5B. Remedies 10
5C. Survival of Representations and Warranties 10
5D. Successors and Assigns 10
5E. Xxxxxxxxxxxx 00
0X. Counterparts 11
5G. Descriptive Headings; Interpretation 11
5H. Governing Law 11
Schedules
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Schedule of Xxxxxxxxxx
Xxxxxxxx 0X
Xxxxxxxx 0X
Xxxxxxxx 0X
XXXXXX COMMUNICATIONS CORPORATION
PURCHASE AGREEMENT
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THIS AGREEMENT is made as of March 8, 1999, between Pointe Communications
Corporation, a Nevada corporation (the "Company"), EGL/Natwest Ventures USA
L.P., a Delaware limited partnership, EGL Equity Partners III, L.P., a Delaware
limited partnership and EGL Equity Offshore Partners III, L.P., a Cayman Islands
Exempted Limited Partnership (collectively, the "Purchasers"). Except as
otherwise indicated herein, capitalized terms used herein are defined in Section
4 hereof.
On the date hereof, each of the Purchasers has agreed to make a loan to the
Company, in the dollar amounts set forth opposite each such Purchaser's name on
Schedule I attached hereto (collectively, the "Loan"), for which the Company
will issue a note to each of the Purchasers (collectively, the "Notes"). In
connection therewith and in partial consideration therefor, the parties are
entering into this Agreement.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
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1A. Authorization of the Notes and the Warrants. The Company shall
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authorize the issuance of the Notes and warrants to the Purchasers
(collectively, the "Warrants") to purchase 5,000,000 shares of the Common Stock,
par value $.00001 per share (the "Common Stock").
1B. Issuance of the Notes and the Warrants. At the Closing, the
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Company shall issue to the Purchasers and, subject to the terms and conditions
set forth herein, the Purchasers shall obtain from the Company, the Notes and
the Warrants in consideration of each Purchaser's agreement to make their
portion of the Loan to the Company.
1C. The Closing. The closing of the Loan and the issuance of the Notes
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and the Warrants (the "Closing") shall take place at the offices of the
Purchasers at 10:00 a.m. on March 8, 1999, or at such other place or on such
other date as may be mutually agreeable to the Company and the Purchasers. At
the Closing, the Company shall deliver to the Purchasers the Notes and the
Warrants to be issued to each such Purchaser, registered in each such
Purchaser's or its nominee's name, and each such Purchaser shall make their
portion of the Loan.
Section 2. Covenants.
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2A. Financial Statements and Other Information. The Company shall
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deliver to each Purchaser, so long as each such Purchaser holds a Note, any
Underlying Common Stock or any other security of the Company:
(i) as soon as available but in any event within 30 days after the
end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated state-ments of income and cash flows of the
Company and its Subsid-iaries for such monthly period and for the period from
the beginning of the fiscal year to the end of such month, and unaudited
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such monthly period, setting forth in each case
comparisons to the Com-pany's annual budget and to the corresponding period in
the preceding fiscal year, and all such statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied,
subject to the absence of footnote disclosures and to normal year-end
adjustments for recurring accruals, and shall be certified by the Com-pany's
chief financial officer and will be accompanied by a written review thereof
prepared by the Chief Executive Officer of the Company;
(ii) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general written
communications which the Company sends to its stockholders and copies of all
registration statements and all regular, special or periodic reports which it
files, or (to its knowledge) any of its officers or direc-tors file with respect
to the Company, with the Securi-ties and Exchange Commission or with any
securities exchange on which any of its securities are then listed, and copies
of all press releases and other statements made available gen-erally by the
Company to the public concerning material developments in the Company's and its
Subsidiaries' businesses;
(iii) within thirty days prior to the beginning of each fiscal year, an
annual budget and operating plan for such year (and as soon as available, any
subsequent revisions thereto); and
(iv) with reasonable promptness, such other infor-mation and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this paragraph 2A may reasonably request.
To the best of the Company's knowledge, each of the financial statements
referred to in subparagraph (i) shall be true and correct in all material
respects as of the dates and for the periods stated therein, subject in the case
of the unaudited financial statements to changes resulting from normal year-end
adjustments for recurring accruals none of which would, alone or in the
aggregate, be materially adverse to the financial condition, operating results,
assets, operations or business prospects of the Company and its Subsidiaries
taken as a whole.
2B. Inspection of Property. The Company shall permit any
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representatives designated by a Purchaser (so long as such Purchaser holds any
Underlying Common Stock), upon reasonable notice and during normal business
hours, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and its Subsidiaries and make copies thereof or extracts therefrom and (iii)
dis-cuss the affairs, finances and accounts of the Company and its Subsidiaries
with the directors, officers, key employees and inde-pen-dent accountants of the
Company and its Subsidiaries. The presentation of an executed copy of this
Agreement by such Purchaser or any holder of Underlying Common Stock to the
Company's independent accountants shall constitute the Company's permission to
its independent accountants to participate in discussions with such Persons.
2C. Board of Directors Representation. The Company shall give the
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Purchasers (so long as the Purchasers hold any Underlying Common Stock) written
notice of each meeting of its board of directors and each regularly scheduled
committee meeting thereof at the same time and in the same manner as notice is
given to the directors (which notice shall be promptly confirmed in writing to
each such Purchaser), and the Company shall permit a representative of the
Purchasers to attend as an observer all meetings of its board of directors and
all committees thereof. Each representative shall be entitled to receive all
written materials and other information (including, without limitation, copies
of meeting minutes) given to directors in connection with such meetings at the
same time such materials and information are given to the direc-tors. If the
Company pro-poses to take any action by written consent in lieu of a meeting of
its board of directors or of any committee thereof, the Company shall give
written notice thereof to each such Purchaser prior to the effective date of
such consent describing in reasonable detail the nature and substance of such
action. The Company shall also cause one representative appointed by the
Purchasers to be appointed to the Board of Directors of the Company and agrees
to use its best efforts to cause any such representative to remain a member of
the Board of Directors of the Company so long as the Purchasers own any
Underlying Common Stock including, without limitation, nominating, or causing
the nomination of, any such representative to the Board of Directors of the
Company. Such Purchasers' representative to the Board of Directors of the
Company shall be entitled to receive such fees and stock option grants as are
customarily granted to the other members of the Company's Board of Directors.
2D. Current Public Information. The Company shall file all reports
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required to be filed by it under the Securities Act and the Securities Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission thereunder and shall take such further action as any holder or
holders of Restricted Securities (as defined in Rule 144 adopted by the
Securities and Exchange Commission under the Securities Act) may reasonably
request, all to the extent required to enable such holders to sell Restricted
Securities pursuant to Rule 144 (as such rule may be amended from time to time)
or any similar rule or regulation hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements.
2E. SBIC Regulatory Provisions.
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(i) Within 75 days after the Closing and each subsequent Financing
hereunder by each holder of a Note or Underlying Common Stock which is an SBIC
(an "SBIC Holder") and at the end of each month thereafter until all of the
proceeds from the Loan from such SBIC Holder and the exercise of the Warrants by
such SBIC Holder have been used by the Company and its Subsidiaries, the Company
shall deliver to each SBIC Holder a written statement certified by the Company's
president or chief financial officer describing in reasonable detail the use of
the proceeds of the Loan from such SBIC Holder reflected by the Notes by the
Company and its Subsidiaries. In addition to any other rights granted
hereunder, the Company shall grant each SBIC Holder and the United States Small
Business Administration (the "SBA") access to the Company's records for the
purpose of verifying the use of such proceeds.
(ii) Upon the occurrence of a Regulatory Violation or in the event
that any SBIC Holder determines in its reasonable good faith judgment that a
Regulatory Violation has occurred, in addition to any other rights and remedies
to which it may be entitled as a holder of a Note or of Underlying Common Stock
(whether under this Agreement, the Company's Certificate of Incorporation or
otherwise), each SBIC Holder shall have the right to the extent required under
the SBIC Regulations to demand the immediate repayment of the Loan from such
SBIC Holder and the repurchase of all Underlying Common Stock owned by such SBIC
Holder at a price equal to the purchase price paid for such securities hereunder
(plus accrued but unpaid interest on the Note held by such SBIC Holder) by
delivering written notice of such demand to the Company. The Company shall pay
the purchase price for such stock by a cashier's or certified check or by wire
transfer of immediately available funds to each SBIC Holder demanding repurchase
within 30 days after the Company's receipt of the demand notice, and upon such
payment, each such SBIC Holder shall deliver the certificates evidencing the
Underlying Common Stock to be repurchased duly endorsed for transfer or
accompanied by duly executed forms of assignment.
(iii) For purposes of this paragraph, "Regulatory Violation"
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means, with respect to any SBIC Holder providing Financing under this Agreement,
(a) a diversion of the proceeds of such Financing from the reported use thereof
on the use of proceeds statement delivered by the Company on SBA Form 1031
delivered at the Closing, if such diversion was effected without obtaining the
prior written consent of the SBIC Holders (which may be withheld in their sole
discretion) or (b) a change in the principal business activity of the Company
and its Subsidiaries to an ineligible business activity (within the meaning of
the SBIC Regulations) if such change occurs within one year after the date of
the initial Financing hereunder; "SBIC Regulations" means the Small Business
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Investment Act of 1958 and the regulations issued thereunder as set forth in 13
CFR 107 and 121, as amended; and the term "Financing" shall have the meaning set
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forth in the SBIC Regulations.
2F. Reservation of Common Stock. The Company shall at all times reserve
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and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of issuance upon exercise of the Warrants, such number of
shares of Common Stock issuable upon the exercise of the Warrants. All shares
of Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange upon which shares of Common Stock may be listed (except for official
notice of issuance which shall be immediately transmitted by the Company upon
issuance).
2G. Public Disclosures. The Company shall not, nor shall it permit any
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Subsidiary to, disclose the name or identity of the Purchasers as investors in
the Company in any press release or other public announcement or in any document
or material filed with any governmental entity, without the prior written
consent of each such Purchaser, unless such disclosure is required by applicable
law or governmental regulations or by order of a court of competent
juris-diction, in which case prior to making such disclosure the Company shall
give written notice to each such Purchaser describing in reason-able detail the
proposed content of such disclosure and shall permit each such Purchaser to
review and comment upon the form and substance of such disclosure.
2H. Preemptive Rights.
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(a) Until a Purchaser's Note is paid in full, such Purchaser shall have
the following preemptive rights: except for issuances of Common Stock (i) to
the Company's employees, (ii) upon the conversion of the Warrant or other
warrants or options outstanding as of the date hereof, or granted within the
next 90 days as a part of similar bridge financings or as a part of the
contemplated CS First Boston/Breckenridge financing, (iii) in connection with
the acquisition of another company or business, (iv) pursuant to a public
offering registered under the Securities Act, if the Company authorizes the
issuance or sale of any shares of Common Stock, preferred stock or any
securities (other than those described in (i) through (iv) above) containing
options or rights to acquire any shares of Common Stock or preferred stock
(other than as a dividend on the outstanding Common Stock), the Company shall
first offer to sell to each holder of Underlying Common Stock a portion of such
stock or securities equal to the quotient determined by dividing (1) the number
of shares of Under-lying Common Stock held by such holder by (2) the sum of the
total number of shares of Underlying Common Stock and the number of shares of
Common Stock outstanding which are not shares of Under-lying Common Stock. Each
holder of Underlying Common Stock shall be entitled to purchase such stock or
securities at the most favorable price and on the most favorable terms as such
stock or securities are to be offered to any other Persons The purchase price
for all stock and securities offered to the holders of the Underlying Common
Stock shall be payable in cash or, to the extent otherwise required hereunder,
notes issued by such holders.
(b) In order to exercise its purchase rights hereunder, a holder of
Underlying Common Stock must, within 15 days after receipt of written notice
from the Company describing in reasonable detail the stock or securities being
offered, the purchase price thereof, the payment terms and such holder's
percentage allotment, deliver a written notice to the Company describing its
election hereunder, together with payment of the purchase price therefor and
such subscription and other documents as are a part of such offering.
(c) Upon the expiration of the offering period described above, the
Company shall be entitled to sell such stock or securities which the holders of
Underlying Common Stock have not elected to purchase during the 90 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any stock or securities
offered or sold by the Company after such 90-day period must be reoffered to the
holders of Underlying Common Stock pursuant to the terms of this paragraph.
2I. Taxes. The Company hereby acknowledges and agrees that as of the
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date hereof, it has placed One Million Three Hundred Thousand Dollars
($1,300,000) in escrow (the "Escrowed Amount") with Cushing, Morris, Xxxxxxxxxx
& Xxxxx, LLP solely for the purpose of paying certain tax liabilities. The
Company hereby covenants and agrees that (A) no later than 180 days after the
Closing, it shall have (i) filed all federal, state, local and foreign income
and other tax returns, reports and declarations which were required by
applicable law to have been filed at or before the Closing, and (ii) paid all
taxes (including, without limitation, all taxes required to be withheld or any
interest and penalties on any taxes) in respect of the periods covered by said
returns, reports and declarations or any other taxable period ending on or
before the Closing, and (B) the Escrowed Amount shall be used solely for the
payment of any and all tax liabilities of the Company.
2J. Licenses. The Company hereby covenants and agrees that it
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shall cause, and take all such action as is necessary to cause, all permits,
concessions, grants, franchises, licenses and other federal, state, local or
foreign governmental authorizations and approvals material, individually or in
the aggregate, to the conduct of all or any part of the business of the Company
and its Subsidiaries to be, at all times, in full force and effect.
2K. Settlement Agreement. The Company hereby covenants and agrees that
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the Company and the Subsidiaries shall, at all times, be in compliance with the
terms and conditions of that certain Settlement Agreement and Release, dated
July 20, 1998, by and between Charter Communications International, Inc. and
Sprint Communications Company L.P., and the related Promissory Note in the
principal amount of Nine Hundred Thousand Dollars ($900,000.00).
2L. General Covenants. The prior consent of the Board of Directors of
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the Company shall be required for: (i) any resolution to wind-up, merge,
consolidate, sell or dispose of all or a substantial portion of the assets or
capital stock of the Company or any material Subsidiary, (ii) any
recapitalization, merger, acquisition or other business combination to which the
Company is a party; (iii) any amendment or addition to the articles of
incorporation or bylaws of the Company or any Subsidiary; (iv) the sale, listing
or secondary offering of any capital stock of the Company or any Subsidiary; (v)
any dividend to be declared on any class of capital stock of the Company or any
Subsidiary; (vi) any material debt or leasing finance agreement not in the
ordinary course of business; (vii) the creation of fixed floating charges or the
giving of guarantees or other collateral; (viii) the appointment or dismissal of
any member of the Board of Directors of the Company or any Subsidiary; (ix) all
matters not in the ordinary course of business, including any related party
transactions; (x) any amendment to the employment or non-compete agreements of
any member of the Company's management team; (xi) any change in the Company's or
any Subsidiary's auditors, accounting policies or accounting reference date;
(xii) the commencement of, and conduct of, any claims or litigation, whether as
plaintiff, defendant or cross-claimant; (xiii) the provision of any loan or
advances to employees; and (xiv) the approval of budgets, all amendments to
budgets and material capital expenditures.
Section 3. Representations and Warranties of the Company. As a
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material inducement to the Purchasers to enter into this Agreement to make the
Loan reflected by the Notes, the Company hereby represents and warrants that:
3A. Organization, Corporate Power and Licenses. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of Nevada and is qualified to do business in every jurisdiction in which the
failure to so qualify has had or would reasonably be expected to have a material
adverse effect on the financial condition, operating results, assets, operations
or business prospects of the Company and its Subsidiaries taken as a whole. The
Company possesses all requisite corporate power and authority necessary to own
and operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to issue the Notes and carry out the
other transactions contemplated by this Agreement. The copies of the Company's
and each Subsidiary's charter documents and bylaws which have been furnished to
the Purchasers' special counsel reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete.
3B. Authorization; No Breach. The execution, delivery and performance
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of this Agreement, the Warrants, the Notes, the Security Agreement executed in
connection herewith and all other agree-ments contemplated hereby to which the
Company is a party, have been duly authorized by the Company. This Agreement,
the Warrants, the Notes, the Security Agreement and all other agreements
contemplated hereby to which the Company is a party each constitutes a valid and
binding obliga-tion of the Company, enforceable in accordance with its terms.
The execution and delivery by the Company of this Agreement, the Warrants, the
Notes, the Security Agreement and all other agreements contemplated hereby to
which the Company is a party, the offering, sale and issuance of the Notes and
the Warrants hereunder, the issuance of the Common Stock upon exer-cise of the
Warrants, and the fulfillment of and compliance with the respective terms hereof
and thereof by the Company, do not and shall not (i) conflict with or result in
a breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any lien, security interest, charge or
encumbrance upon the Company's or any Subsidi-ary's capital stock or assets
pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any authoriza-tion, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency pursuant to, the charter or bylaws of the Company or any Subsidiary,
or any law, statute, rule or regulation to which the Company or any Subsidiary
is sub-ject, or any agreement, instrument, order, judgment or decree to which
the Company or any Subsidiary is subject.
3C. No Material Adverse Change. Since the date of the Company's last
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Form 10-Q filed with the SEC, there has been no material adverse change in the
financial condition, operating results, assets, operations, business prospects,
value, employee relations or customer or supplier relations of the Company and
its Subsidiaries taken as a whole.
3D. Small Business Matters. The Company, together with its
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"affiliates" (as that term is defined in Title 13, Code of Federal Regulations,
121.103), is a "small busi-ness concern" within the meaning of the Small
Business Investment Act of 1958 and the regulations thereunder, including Title
13, Code of Federal Regulations, 121.105. The information regarding the
Company and its affiliates set forth in the Small Business Administration Form
480, Form 652 and Part A of Form 1031 delivered at the Closing is accurate and
complete. Copies of such forms shall have been completed and executed by the
Company and delivered to the Purchasers at the Closing together with a written
statement of the Company regarding its planned use of the proceeds from the Loan
made by the Purchasers reflected by the Notes and the Warrants. Neither the
Company nor any Subsidiary presently engages in, and it shall not hereafter
engage in, any activities, nor shall the Company or any Subsidiary use directly
or indirectly the proceeds from the Loan made by Purchasers reflected by the
Notes or the exercise of Warrants hereunder for any purpose, for which a Small
Business Investment Company is prohibited from providing funds by the Small
Business Investment Act of 1958 and the regulations thereunder (including Title
13, Code of Federal Regulations, 107.720).
3E. Disclosure. There is no fact which the Company has not disclosed
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to the Purchasers in writing and of which any of its officers, directors or
executive employees is aware and which has had or would reasonably be expected
to have a material adverse effect upon the existing or expected financial
condition, operating results, assets, customer or supplier relations, employee
relations or business prospects of the Company and its Subsidiaries taken as a
whole.
3F. Reports with the Securities and Exchange Commission. The Company
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has furnished the Purchaser with complete and accurate copies of its annual
report on Form 10-K for its most recent fiscal year, all other reports or
documents required to be filed by the Company pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act since the filing of the most recent annual report
on Form 10-K and its most recent annual report to its stockholders. Such
reports and filings do not contain any material false statements or any
misstatement of any material fact and do not omit to state any fact necessary to
make the statements set forth therein not misleading. The Company has made all
filings with the Securities and Exchange Commission which it is required to
make, and the Company has not received any request from the Securities and
Exchange Commission to file any amendment or supplement to any of the reports
described in this paragraph.
3G. Licenses. Except as set forth on Schedule 3G attached hereto,
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the Company and the Subsidiaries have obtained all permits, concessions, grants,
franchises, licenses and other federal, state, local or foreign governmental
authorizations and approvals material, individually or in the aggregate, to the
conduct of all or any part of the business of the Company and the Subsidiaries
(collectively, "Licenses"). Except as set forth on Schedule 3G attached hereto,
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all of the Licenses are in full force and effect. None of such Licenses will be
impaired or adversely affected by the transactions contemplated by this
Agreement. There is not pending or, to the knowledge of the Company, threatened
any domestic or foreign suit or proceeding with respect to the suspension,
revocation, cancellation, modification or non-renewal of any of such Licenses,
and no event has occurred that (whether with notice or lapse of time, or both)
will or may result in a suspension or revocation of or failure to renew any of
the Licenses.
3H. Use of Proceeds. The net proceeds received by the Company
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from the Loan and the exercise of the Warrants shall be used for the purposes,
and substantially in the respective amounts, set forth on Schedule 3H attached
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hereto.
Section 4. Definitions.
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4A. Definitions. For the purposes of this Agreement, the
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following terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person controlling,
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controlled by or under common control with such particular Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, contract or otherwise.
"SBIC" means a small business investment company licensed under the Small
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Business Investment Act of 1958, as amended.
"SBIC Regulations" means the Small Business Investment Company Act of 1958,
----------------
as amended, and the regulations issued by the Small Business Administration
thereunder, 13 CFR 107 and 121, as amended.
"Securities Act" means the Securities Act of 1933, as amended, or any
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similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
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agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
-------------------------
amended, or any similar federal law then in force.
"Subsidiaries" means all of the entities the Company has an equity interest in
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as of the Closing as set forth on Schedule 3I hereto, and (ii) any other entity
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the Company obtains an equity interest in, directly or indirectly, after the
Closing.
"Underlying Common Stock" means (i) the Common Stock issued or issuable
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upon exercise of the Warrants and (ii) any Common Stock issued or issuable with
respect to the securities referred to in clause (i) above by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes
of this Agreement, any Person who holds the Warrants shall be deemed to be the
holder of the Underlying Common Stock obtainable upon exercise of the Warrants
in connection with the transfer thereof or otherwise regardless of any
restric-tion or limitation on the exercise of the Warrants, such Underlying
Common Stock shall be deemed to be in existence, and such Person shall be
entitled to exercise the rights of a holder of Underlying Common Stock
here-under. As to any particular shares of Underlying Common Stock, such shares
shall cease to be Underlying Common Stock when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registra-tion statement covering them, (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) or (c) repurchased by the Company or any
Subsidiary.
Section 5. Miscellaneous.
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5A. Expenses. The Company shall pay, and shall hold each of the
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Purchasers and all holders of Under-lying Common Stock harmless from and against
liability for the payment of, (i) the reasonable fees and expenses arising in
connection with the negotiation and execution of this Agreement and the
consummation of the transac-tions contemplated by this Agreement, which fees and
expenses shall be payable at the Closing and shall include, without limitation,
attorneys fees, accountants fees, and industry and marketing due diligence fees,
(ii) the reasonable fees and expenses incurred with respect to any amendments or
waivers (whether or not the same become effec-tive) under or in respect of this
Agreement and the agreements and documents contemplated hereby, (iii) stamp and
other taxes which may be payable in respect of the execution and delivery of
this Agreement or the issuance, delivery or acquisition of any shares of Common
Stock issuable upon exercise of the Warrants, (iv) the reason-able fees and
expenses incurred with respect to the enforcement of the rights granted under
this Agreement and the agreements and documents contem-plated hereby, and (v)
the reasonable fees and expenses incurred by each such Person in any filing with
any governmental agency with respect to its investment in the Company or in any
other filing with any governmental agency with respect to the Company which
mentions such Person, and (vi) the reasonable fees and expenses incurred by any
such Person in connection with any transaction, claim or event which such Person
believes affects the Company and as to which such Person seeks advice of
coun-sel. Additionally, the Company shall pay EGL Investments, L.P. (or any
entity designated by EGL Investments, L.P. from time to time) the following
origination fee (i) One Hundred Thousand Dollars ($100,000.00) in cash at
Closing, and (ii) One Hundred Fifty Thousand Dollars ($150,000.00), payable in
eight (8) equal monthly installments, by the tenth (10th) day of each month,
beginning in March 1999; provided, however, that in the event of a consolidation
-----------------
or merger of the Company with or into any other entity or entities in which more
than 50% of the voting power of the Company is disposed of, or a sale,
conveyance or disposition of all or substantially all of the assets of the
Company, or the effectuation by the Company or its stockholders of a transaction
or series of related transactions in which more than 50% of the voting power of
the Company is disposed of, any amounts outstanding pursuant to the foregoing
provision shall be immediately due and payable.
5B. Remedies. Each holder of Under-lying Common Stock shall have all
--------
rights and remedies set forth in this Agreement, and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law. Any
Person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law.
5C. Survival of Representations and Warranties. All repre-sentations
--------------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby regardless of any
investigation made by any of the Purchasers or on its behalf.
5D. Successors and Assigns. Except as otherwise expressly provided herein,
-----------------------
all covenants and agreements contained in this Agreement by or on behalf of any
of the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Purchaser's bene-fit as a
purchaser or holder of the Warrants or Underlying Common Stock are also for the
benefit of, and enforceable by, any subsequent holder of such Warrants or such
Underlying Common Stock.
5E. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effec-tive and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
5F. Counterparts. This Agreement may be executed simul-tane-ously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counter-parts taken together shall constitute
one and the same Agreement.
5G. Descriptive Headings; Interpretation. The descrip-tive headings of
------------------------------------
this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
5H. Governing Law. The corporate law of the State of Nevada shall
--------------
govern all issues and questions concerning the relative rights and obligations
of the Company and its stock-holders. All other issues and questions concerning
the construc-tion, validity, enforcement and interpretation of this Agreement
and the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of Georgia, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Georgia or any other juris-diction) that would cause the application of the laws
of any jurisdiction other than the State of Georgia.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
POINTE COMMUNICATIONS CORPORATION
By
--------------------------------------
Its
--------------------------------------
EGL/NATWEST VENTURES USA L.P.
BY: EGL VENTURES, INC., AS GENERAL
PARTNER
By
--------------------------------------
Its
--------------------------------------
EGL EQUITY PARTNERS, III, L.P.
BY: EGL INVESTMENTS, L.P., AS GENERAL
PARTNER
BY: EGL GP, INC., AS GENERAL PARTNER
By
--------------------------------------
Its
--------------------------------------
EGL EQUITY OFFSHORE PARTNERS III, L.P.
BY: EGL INVESTMENTS, L.P., AS GENERAL PARTNER
BY: EGL GP, INC., AS GENERAL PARTNER
By
--------------------------------------
Its
--------------------------------------
SCHEDULE I
----------
THE PURCHASERS
--------------
Warrant
Purchaser Loan Amount Share Amount
-------------------------------------- ------------ ------------
EGL/NATWEST VENTURES USA, L.P. $ 1,582,500 1,582,500
EGL EQUITY PARTNERS III, L.P. $ 1,125,500 1,125,500
EGL EQUITY OFFSHORE PARTNERS III, L.P. $ 2,292,000 2,292,000
SCHEDULE 3G
-----------
SCHEDULE 3H
-----------
Approximately One Million Dollars (plus accrued interest) will be used to
repay all principal and interest owed to EGL/Natwest Ventures USA, L.P. under
that certain Promissory Note dated December 2, 1998. The remainder of the
proceeds from the Loan will be used to fund the continued growth and expansion
of the Company. None of the proceeds from the Loan will be used to repay any
outstanding debt of the Company that has a maturity date on or prior to one year
after the Closing Date.
SCHEDULE 3I
-----------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of
the 8th day of March, 1999 by and among POINTE COMMUNICATIONS CORPORATION, a
Nevada corporation (the "Company") and the holders of the Company's Common
Stock, par value $.00001 per share (the "Common Stock"), identified under the
heading "Investors" on the signature pages attached hereto (the "Investors").
WHEREAS, the Company and the Investors have entered into that certain
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"); and
WHEREAS, the Company has agreed to provide certain registration and other
rights to the Investors in connection with the Common Stock purchased pursuant
to the Purchase Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. Unless the context otherwise requires, the terms
-----------
defined in this Section 1 shall have the meanings herein specified for all
purposes of this Agreement or, as the case may be, in the Purchase Agreement,
applicable to both the singular and plural forms of any of the terms herein
defined.
"Agreement" means this Registration Rights Agreement, as the same may be
---------
amended, modified or supplemented in accordance with the terms hereof.
"Board" means the Board of Directors of the Company.
-----
"Common Stock" means the common stock, $.00001 par value per share, of the
-------------
Company.
"Commission" means the Securities and Exchange Commission.
----------
"Company" has the meaning assigned to it in the introductory paragraph of
-------
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
-------------
"Investors" has the meaning assigned to it in the introductory paragraph of
---------
this Agreement.
"Other Shares" has the meaning assigned to it in Section 4(f) of this
-------------
Agreement.
"Person" includes any natural person, corporation, trust, association,
------
company, partnership, joint venture and other entity and any government,
governmental agency, instrumentality or political subdivision.
"Proposed Registration" has the meaning assigned to it in Section 4(a) of
----------------------
this Agreement.
The terms "register" "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Securities Act" means the Securities Act of 1933, as amended.
---------------
2. Required Registration.
----------------------
a. At any time after the Closing Date, the Investors may
collectively request (the "Request") for the Company to register under the
Securities Act all or any portion of the shares of Common Stock held by such
requesting Investors for sale in the manner specified in the Request. The
Investors may request any amount of Common Stock to be registered.
Notwithstanding anything to the contrary contained herein, no request may be
made under this Section 2 within 90 days after the effective date of a
registration statement filed by the Company covering a firm commitment
underwritten public offering in which the Investors shall have been entitled to
join pursuant to Section 4. The Company shall be obligated to file a
registration statement with respect to such Common Stock registered pursuant to
this Section 2 as soon as practicable after the date of the Request, but no
later than 60 days after such Request.
b. Following receipt of any Request under this Section 2, the
Company shall immediately notify each of the Investors and shall use its best
efforts to register under the Securities Act, for public sale in accordance with
the method of disposition specified in such Request, the number of shares of
Common Stock specified in such Request. If the Investors initiating the Request
hereunder intend to distribute the stock covered by their Request by means of an
underwriting, the underwriter will be selected by the Investors owning a
majority of the shares of Common Stock subject to such Request and such
underwriter shall be reasonably acceptable to the Company. The Company shall
not be required to effect a registration pursuant to this Section 2 after the
Company has effected two (2) registrations pursuant to this Section 2 that have
been declared or ordered effective by the Commission and that cover all shares
of Common Stock included in the Request.
c. The Company shall not be entitled to include in any
registration statement referred to in this Section 2 shares of Common Stock to
be sold by the Company for its own account. The Company will not file with the
Commission any other registration statement with respect to its Common Stock,
whether for its own account or that of other stockholders, from the date of
receipt of the Request until the completion of the period of distribution of the
registration contemplated thereby. The Company shall have the right to effect a
registration pursuant to this Section 2 on Form S-3 (or any comparable or
successor form) if the Company is eligible to use such form.
3. Form S-3 Registration. The Investors may also collectively request
----------------------
that the Company file a registration statement on Form S-3 or any comparable or
successor form for a sale or public offering of all or any portion of the shares
of Common Stock held by such requesting Investors, provided that the reasonably
anticipated aggregate price to the public of such offering shall exceed
$500,000. Following receipt of any Request under this Section 3, the Company
will use its best efforts to register under the Securities Act on Form S-3 or
any comparable or successor form, for public sale in accordance with the method
of disposition specified in such Request, the number of shares of Common Stock
specified in such Request. Promptly, but in no event more than thirty (30) days
following receipt of such Request, the Company will notify each of the Investors
and shall include in such registration all shares of Common Stock with respect
to which each such Investor has given notice to the Company of such Investor's
request for inclusion therein within 20 days after the giving of such Request by
the Company. The Company shall not be required to effect a registration
pursuant to this Section 3 after the Company has effected two (2) registration
pursuant to this Section 3 that has been declared or ordered effective by the
Commission and that cover all shares of Common Stock included in the Request.
4. Piggyback Registration.
-----------------------
a. Each time that the Company proposes for any reason to register
any of its Common Stock under the Securities Act in connection with the proposed
offer and sale of its Common Stock for money, either for its own account or on
behalf of any other security holder ("Proposed Registration"), the Company shall
promptly give written notice of such Proposed Registration to the Investors and
shall offer the Investors the right to request inclusion of the shares of Common
Stock held by the Investors in the Proposed Registration.
b. Each Investor shall have 30 days from the receipt of such
notice to deliver to the Company a written request specifying the number of
shares of Common Stock such Investor intends to sell in the Proposed
Registration and the Investor's intended method of disposition.
c. In the event that the Proposed Registration by the Company is,
in whole or in part, an underwritten public offering, the Company shall so
advise the Investors as part of the written notice given pursuant to Section
4(a), and any request under Section 4(b) must specify that the shares of Common
Stock be included in the underwriting on the same terms and conditions as the
shares of Common Stock, if any, otherwise being sold through underwriters under
such registration.
d. Upon receipt of a written request pursuant to Section 4(b), the
Company shall promptly use its best efforts to cause all such shares of Common
Stock held by the Investors to be registered under the Securities Act (and
included in any related qualifications under blue sky laws or other compliance),
to the extent required to permit sale or disposition as set forth in the
Proposed Registration.
e. In the event that the offering is to be an underwritten
offering, the Investors proposing to distribute their shares of Common Stock
through such underwritten offering agree to enter into an underwriting agreement
with the underwriter or underwriters selected for such underwriting by the
Company.
f. Notwithstanding the foregoing, if in its good faith judgment,
the managing underwriter determines and advises in writing that the inclusion of
all shares of Common Stock proposed to be included in the underwritten public
offering, together with any other issued and outstanding shares of Common Stock
proposed to be included therein by holders other than the Investors (such other
shares hereinafter collectively referred to as the "Other Shares"), would
interfere with the successful marketing of such securities, then the number of
such shares to be included in such underwritten public offering shall be reduced
first, (i) by the shares requested to be included in such registration by the
-----
holders of Other Shares, on a pro rata basis, based upon the number of Other
--------
Shares sought to be registered by each holder, and, if necessary, second (ii)
------
from the number of shares of Common Stock then owned by the Investors, on a pro
---
rata basis, based upon the number of shares of Common Stock sought to be
----
registered by the Investors, provided, that, the number of shares of Common
Stock in the aggregate sought to be registered by the Investors shall not be
reduced by more than 25% of the amount of shares requested for registration.
5. Preparation and Filing. If and whenever the Company is under an
------------------------
obligation pursuant to this Agreement to use its best efforts to effect the
registration of any Common Stock, the Company shall, as expeditiously as
practicable:
a. prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective in accordance with Section
5(b) hereof;
b. prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the earlier of (i) the sale of all Common Stock covered thereby, or (ii)
the expiration of twelve months from the effective date of the registration
statement, and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all shares of Common Stock covered by such
registration statement;
c. furnish to each Investor whose shares of Common Stock are being
registered pursuant to this Agreement, such number of copies of any summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Investor may reasonably request in order to facilitate the public sale
or other disposition of such shares of Common Stock;
d. use its best efforts to register or qualify the shares of
Common Stock covered by such registration statement under the securities or blue
sky laws of such jurisdictions as each Investor whose shares of Common Stock are
being registered pursuant to this Agreement shall reasonably request within ten
(10) days prior to the original filing of the registration statement and do any
and all other acts or things which may be necessary or advisable to enable such
Investor to consummate the public sale or other disposition in such
jurisdictions of such shares of Common Stock;
e. at any time when a prospectus relating thereto covered by such
registration statement is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 5(b) hereof, notify each
Investor whose shares of Common Stock are being registered pursuant to this
Agreement of the happening of any event as a result of which the prospectus
included in such registration, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing and, at the request of such Investor, as
promptly as practicable prepare, file and furnish to such Investor a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such shares,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
f. if the Company has delivered preliminary or final prospectuses
to the selling Investors and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the selling Investors and, if requested, the selling Investors shall
immediately cease making offers of shares of Common Stock and return all
prospectuses to the Company. The Company shall promptly provide the selling
Investors with revised prospectuses and, following receipt of the revised
prospectuses, the selling Investors shall be free to resume making offers of the
shares of Common Stock; and
g. furnish, at the request of any Investor whose shares of Common
Stock are being registered pursuant to this Agreement, on the date that such
shares of Common Stock are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to the Investors holding a majority of the
shares of Common Stock being registered, addressed to the underwriters, if any,
and to the Investors whose shares of Common Stock are being registered, and (ii)
a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to the Investors holding a majority
of the shares of Common Stock being registered, addressed to the underwriters,
if any, and if permitted by applicable accounting standards, to the Investors
whose shares are being registered.
6. Expenses. The Company shall pay all expenses incurred by the
--------
Company in complying with Sections 2, 3, 4 and 5 of this Agreement, including,
without limitation, all registration and filing fees (including all expenses
incident to filing with the National Association of Securities Dealers, Inc.),
fees and expenses of complying with securities and blue sky laws, printing
expenses, fees and disbursements of the Company's counsel and counsel for the
Investors; provided, however, that all underwriting discounts and selling
commissions applicable to the shares of Common Stock covered by registration
effected pursuant to this Agreement hereof shall be borne by such holder
thereof, in proportion to the number of shares of Common Stock sold by such
holder.
7. Indemnification.
---------------
a. In the event of any registration of any shares of Common Stock
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless the selling holder of such shares, each of such holder's
officers, directors and partners, each underwriter of such shares, if any, each
broker or any other person acting on behalf of such selling holder, if any, who
controls any of the foregoing Persons within the meaning of the Securities Act,
from and against any losses, claims, damages or liabilities, joint or several,
to which any of the foregoing persons may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any registration
statement under which such shares of Common Stock were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or any document incident to
registration or qualification of any shares of Common Stock pursuant to Section
5(d) hereof, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading or, with respect to any prospectus,
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or any violation by the Company of the
Securities Act, the Exchange Act, or state securities or blue sky laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration or qualification under the
Securities Act or such state securities or blue sky laws. The Company shall
reimburse (after receipt of appropriate documentation) such selling holder,
officer, director, partner, underwriter, broker or other Person acting on behalf
of such selling holder and each such controlling Person for any legal or any
other out-of-pocket expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable for any
indemnity or hold harmless obligation hereunder to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, said prospectus, or
said amendment or supplement or any document incident to registration or
qualification of any shares of Common Stock pursuant to Section 5(d) hereof in
reliance upon and in conformity with written information furnished to the
Company by such selling holder or such underwriter specifically for use in the
preparation thereof.
b. Before shares of Common Stock held by any selling holder shall
be included in any registration pursuant to this Agreement, such prospective
selling holder and any underwriter acting on its behalf shall have agreed to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 7(a)) the Company, each director of the Company, each officer
of the Company who signs such registration statement and any Person who controls
the Company within the meaning of the Securities Act, with respect to any untrue
statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such selling holder or such underwriter specifically
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus or amendment or supplement.
c. Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in Section 7(a) or (b),
such indemnified party will, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement of
such action. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so as to assume the defense thereof, the
indemnifying party shall be responsible for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof,
provided, however, that, if any indemnified party shall have reasonably
--------------
concluded that there may be one or more legal defenses available to such
----
indemnified party which are different from or additional to those available to
---
the indemnifying party, there is an actual or potential conflict of interest
between the indemnified and the indemnifying party, or that such claim or
litigation involves or could have an effect upon matters beyond the scope of the
indemnity agreement provided in this Section 7, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party, and such indemnifying party shall reimburse such indemnified
party and any Person controlling such indemnified party for the fees and
expenses of counsel retained by the indemnified party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Section 7; provided, however, that in no event shall any indemnification by a
------------------
holder under this subsection exceed the proceeds, net of commissions and income
taxes, from the offering received by the holder. The indemnified party shall
not make any settlement of any claims indemnified against hereunder without the
written consent of the indemnifying party or parties, which consent shall not be
unreasonably withheld. No indemnifying party, in defense of any such claim or
litigation, shall, except with the consent of such indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party a release from all liability in respect to such claim or
litigation.
d. In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of shares of Common Stock exercising rights under this Agreement, or any
controlling Person of any such holder, makes a claim for indemnification
pursuant to this Section 7, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 7 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling holder
or any such controlling Person in circumstances for which indemnification is
provided under this Section 7, then, in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject as is appropriate to reflect the relative fault of
the Company and such holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, it being understood
that the parties acknowledge that the overriding equitable consideration to be
given effect in connection with this provision is the ability of one party or
the other to correct the statement or omission which resulted in such losses,
claims, damages or liabilities, and that it would not be just and equitable if
contribution pursuant hereto were to be determined by pro rata allocation or by
any other method of allocation which does not take into consideration the
foregoing equitable considerations. Notwithstanding the foregoing, (i) no such
holder will be required to contribute any amount in excess of the proceeds to it
of all shares of Common Stock sold by it pursuant to such registration
statement, and (ii) no person or entity who is guilty of fraudulent
misrepresentation, within the meaning of Section 12(f) of the Securities Act,
shall be entitled to contribution from any person or entity who is not guilty of
such fraudulent misrepresentation.
e. Notwithstanding any of the foregoing, if, in connection with an
underwritten public offering of the shares of Common Stock, the Company, the
selling holders and the underwriters enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification among the parties, then the indemnification provision of this
Section 7 shall be deemed inoperative for purposes of such offering.
8. Reporting Requirements Under the Exchange Act. The Company agrees
-----------------------------------------------
to keep effective its registration under the Exchange Act and to file timely
such information, documents and reports as the Commission may require or
prescribe under the Exchange Act. The Company agrees to file timely (whether or
not it shall then be required to do so) such information, documents and reports
as the Commission may require or prescribe under the Exchange Act. The Company
forthwith upon request agrees to furnish to any Investor (a) a written statement
by the Company that it has complied with such reporting requirements, (b) a copy
of the most recent annual or quarterly report of the Company, and (c) such other
reports and documents filed by the Company with the Commission as such Investor
may reasonably request in availing itself of an exemption for the sale of Common
Stock without registration under the Securities Act. The Company acknowledges
and agrees that the purposes of the requirements contained in this Section 8 are
(a) to enable any such Investor to comply with the current public information
requirements contained in Rule 144 under the Securities Act should such Investor
ever wish to dispose of any of the securities of the Company acquired by it
without registration under the Securities Act in reliance upon Rule 144 (or any
other similar exemptive provision), and (b) to qualify the Company for the use
of registration statements on Form S-3. In addition, the Company agrees to take
such other measures and file such other information, documents and reports as
shall be required of it hereafter by the Commission as a condition to the
availability of Rule 144 under the Securities Act (or any similar exemptive
provision) and the use of Form S-3.
9. Shareholder Information. The Company may request each Investor as
------------------------
to which any registration is to be effected pursuant to this Agreement to
furnish the Company with such information with respect to such Investor and the
distribution of such Common Stock as the Company may from time to time
reasonably request in writing and as shall be required by law or by the
Commission in connection therewith, and each Investor as to which any
registration is to be effected pursuant to this Agreement agrees to furnish the
Company with such information.
10. Forms. All references in this Agreement to particular forms of
-----
registration statements are intended to include, and shall be deemed to include,
references to all successor forms which are intended to replace, or to apply to
similar transactions as, the forms herein referenced.
11. Termination of Rights. The rights of the Investors to register
-----------------------
shares of Common Stock pursuant to this Agreement, and the Company's obligations
to effect such registration, shall terminate as to all of the Company's
obligations hereunder on the date on which all shares of Common Stock held by
the Investors have been registered under applicable federal and state securities
laws. Notwithstanding anything in this Agreement to the contrary, the
registration rights of the Investors under this Agreement shall only apply to
(i) the Common Stock issued upon the exercise of the warrants issued to the
Investors in connection with the Purchase Agreement, and (ii) any Common Stock
issued or issuable with respect to the securities referred to in clause (i)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization.
12. Transferability. The registration rights of the Investors under
---------------
this Agreement are not transferable except to (i) any transferee of any
Investor's shares of Common Stock initially issued pursuant to the Purchase
Agreement, and (ii) any transferee that controls, or is or controlled by, or is
under common control with, the transferor or is an officer, director or
affiliate of an Investor; provided however, that the Company is given written
notice by the transferor at the time of such transfer stating the name and
address of the transferee and identifying the securities with respect to which
the rights under this Agreement are being assigned and provided further that the
transferee agrees in writing to acquire and hold such securities subject to the
provisions of this Agreement.
13. Granting of Registration Rights. The Company shall not grant any
---------------------------------
registration rights superior to those granted hereunder without the prior
written consent of the Investors.
14. Miscellaneous.
-------------
a. Waivers and Amendments. This Agreement and the other documents
----------------------
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated orally, except pursuant to the written consent of the Investors.
b. Rights of Investors Inter Se. Each Investor shall have the
--------------------------------
absolute right to exercise or refrain from exercising any right or rights which
such Investor may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver of any obligation of the Company
under this Agreement and to enter into an agreement with the Company for the
purpose of modifying this Agreement or any agreement effecting any such
modification, and such Investor shall not incur any liability to any other
Investor with respect to exercising or refraining from exercising any such right
or rights.
c. Notices. All notices, requests, consents and other
-------
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first class postage prepaid, registered or certified mail
or by a nationally recognized overnight delivery service (such as UPS or Federal
Express):
(1) If to any Investor, at the address set forth on the
signature page hereto, or such address as such holder may specify by written
notice to the Company, or
(2) If to the Company, at the present place of business of
the Company or at such other location or address as the Company may specify by
notice to the Investors, and each such notice, request, consent and other
communication shall for all purposes of this Agreement be treated as being
effective or having been given when delivered, if delivered personally or by an
overnight delivery service, or, if sent by mail, at the earlier of its actual
receipt or three (3) days after the same has been deposited in a regularly
maintained receptacle for the deposit of United States mail, addressed and
postage prepaid as aforesaid.
d. Severability. Should any one or more of the provisions of this
------------
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement,
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
e. Headings. The headings of the sections, subsections and
--------
paragraphs of this Agreement have been inserted for convenience of reference
only and do not constitute a part of this Agreement.
f. Choice of Law. It is the intention of the parties that the
---------------
internal substantive laws, and not the laws of conflicts, of the State of
Georgia should govern the enforceability and validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties.
15. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed personally or by a duly authorized representative thereof as of the day
and year first above written.
THE COMPANY:
POINTE COMMUNICATIONS CORPORATION
By:
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
Address: 0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
INVESTORS:
By: EGL/NATWEST VENTURES USA, L.P.
By: EGL VENTURES, INC., AS GENERAL
PARTNER
By:
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
Address: 0000 Xxxxxxxx Xxxx
Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
By: EGL EQUITY PARTNERS III, L.P.
By: EGL INVESTMENTS, L.P., AS
GENERAL PARTNER
By: EGL GP, INC., AS GENERAL
PARTNER
By:
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
Address: 0000 Xxxxxxxx Xxxx
Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
By: EGL EQUITY PARTNERS III, L.P.
By: EGL INVESTMENTS, L.P., AS
GENERAL PARTNER
By: EGL GP, INC., AS GENERAL
PARTNER
By:
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
Address: 0000 Xxxxxxxx Xxxx
Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
SCHEDULE 1INVESTORS
EGL/NATWEST VENTURES USA, L.P.
0000 Xxxxxxxx Xxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
EGL EQUITY PARTNERS III, L.P.
0000 Xxxxxxxx Xxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
EGL EQUITY OFFSHORE PARTNERS III, L.P.
0000 Xxxxxxxx Xxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
PROMISSORY NOTE
---------------
$1,582,500 March 8, 1999
For value received, Pointe Communications Corporation, a Nevada corporation
(the "Maker") promises to pay to the order of EGL/Natwest Ventures USA, L.P., a
-----
Delaware limited partnership ("EGL") at such place as is designated in writing
---
by the holder of this Note, the aggregate principal sum of One Million Five
Hundred Eighty Two Thousand Five Hundred Dollars and no cents ($1,582,500)
together with interest thereon calculated from the date hereof in accordance
with the provisions of this Note. The Maker's obligations under this Note shall
be senior to all of Maker's obligations under any of its unsecured indebtedness
(or guarantees of indebtedness).
1. Payment of Interest. Interest shall accrue on the outstanding
---------------------
principal amount of this Note at a rate equal to 10%. All accrued interest
shall be due and payable on the date on which the final principal amount on this
Note is paid. Interest will accrue on any principal payment due under this Note
and, to the extent permitted by applicable law, on any interest which has not
been paid on the date on which it is payable until such time as payment therefor
is actually delivered to the holder hereof.
2. Payment of Principal. The Maker shall repay the principal amount of
--------------------
$1,582,500 (or such lesser amount as may then be outstanding), together with all
accrued and unpaid interest thereon, to the holder hereof on the earlier of (i)
July 6, 1999, (ii) the date on which the Maker obtains permanent (i.e. repayment
or redemption of which is not required within one year) equity financing of at
least Five Million Dollars ($5,000,000.00) ("Permanent Financing"), or (iii) the
-------------------
date on which an Event of Default (as such term is defined in Section 4 hereof)
occurs. The Maker shall give written notice ten (10) business days prior to
consummating such Permanent Financing.
3. Prepayments. The Maker may, at any time and from time to time without
-----------
premium or penalty, prepay all or any portion of the outstanding principal
amount of this Note; provided that the Maker simultaneously pays all interest on
this Note accrued and unpaid through the date of such prepayment.
4. Events of Default. It shall be an "Event of Default" hereunder if the
-------------------
Maker shall (i) fail to repay when due any amounts owed hereunder or shall
otherwise breach any of its obligations under this Note, or under the Note and
Warrant Purchase Agreement or any other document, instrument or agreement
executed in connection herewith (collectively the "Loan Documents"), or if any
representation of warranty made by or on behalf of the Maker in the Loan
Documents shall have been false in any material respect when made, (ii) if the
Maker shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its assets,
or the Maker shall make a general assignment for the benefit of its creditors,
(iii) there shall be commenced against the Maker any case, proceeding or other
action of a nature referred to in clause (ii) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 15 days, (iv)
there shall be commenced against the Maker any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 15 days from entry
thereof, (v) the Maker shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth in
clause (ii), (iii) or (iv) above, or (vi) the Maker shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due.
5. Option. Upon receiving notice, EGL can elect by delivery of written
------
notice to the Maker to convert all or any portion of the principal or accrued
but unpaid interest of this Note into securities issued in connection with a
Permanent Financing or an independent equity financing; it being understood that
EGL shall have the right to participate in any such Permanent Financing or
independent equity financing and shall have the right to purchase each class of
securities offered in such Permanent Financing or independent equity financing
pro rata according to the amount invested in each such class.
6. Default Interest Rate. If the Maker fails to repay the principal
-----------------------
amount, and accrued but unpaid interest thereon, due hereunder in accordance
with the terms hereof, in addition to all of EGL's rights and remedies available
under applicable law, the interest rate on this Note shall increase immediately
by an increment of two (2) percentage points.
7. Cancellation. After all principal and accrued interest at any time
------------
owed on this Note has been paid in full, this Note shall be surrendered to the
Maker for cancellation and shall not be reissued.
8. Costs of Collection. In the event the Maker fails to pay any
---------------------
amounts due hereunder when due, the Maker shall pay to the holder hereof, in
addition to such amounts due, all costs of collection, including reasonable
attorneys' fees.
9. Waivers. The Maker, or its successors and assigns, hereby waives
-------
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Maker hereunder. In any
action on this Note, the holder hereof need not produce or file the original of
this Note, but need only file a photocopy of this Note certified by the holder
hereof to be a true and correct copy of this Note.
10. Remedies. All rights and remedies of EGL, whether provided for
--------
herein or conferred by law, are cumulative and concurrent and the exercise of
any one or more of them shall not preclude the simultaneous or later exercise by
EGL of any or all other rights, powers or remedies.
11. Notice. All notices, demands or other communications to be given
------
or delivered under or by reason of the provisions of this Note shall be in
writing and shall be deemed to have been given if (i) delivered personally to
the recipient, (ii) mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid or (iii) sent to the recipient by
reputable overnight courier services (charges prepaid).
If to EGL:
-----------
EGL/Natwest Ventures USA, L.P.
0000 Xxxxxxxx Xxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Fax Number (000) 000-0000
Confirm Number (000) 000-0000
with a copy, which will not constitute notice to EGL, to:
-------------------------------------------------------------------
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: B. Xxxx Xxxxx
Fax Number (000) 000-0000
Confirm Number (000) 000-0000
If to Pointe Communications Corporation:
--------------------------------------------
Pointe Communications Corporation
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Fax Number
Confirm Number (000) 000-0000
With a copy to
-----------------
Xxxxxxx X. Xxxxxxx, Xx.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Fax: 000-000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
All such notices, request, demands, waivers and other communications shall be
deemed to have been received (i) if by personal delivery on the date after such
delivery, (ii) if by certified or registered mail, on the seventh business day
after the mailing thereof and (iii) if by next-day or overnight mail or
delivery, on the day delivered.
12. Usury Laws. It is the intention of the Maker and the holder of
-----------
this Note to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to reduction to
the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated or
this Note is prepaid, whether by voluntary prepayment by the Maker or otherwise,
then earned interest may never include more than the maximum amount permitted by
law, computed from the date hereof until payment. If such interest does exceed
the maximum legal rate, it shall be deemed a mistake and such excess shall be
canceled automatically and, if theretofore paid, rebated to the Maker or
credited on the principal amount of this Note, or if this Note has been repaid,
then such excess shall be rebated to the Maker.
13. Governing Law. All questions concerning the construction, validity and
--------------
interpretation of this Note will be governed by and construed in accordance with
the domestic laws of the State of Georgia, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Georgia or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Georgia.
14. Note Transferable. This Note, the indebtedness evidenced hereby,
------------------
and all rights hereunder are transferable, in whole or in part, without charge,
upon surrender of this Note at the principal office of the Company for new notes
of like tenor representing in the aggregate the indebtedness hereunder, and each
of such new notes shall represent such portion of such rights as is designated
by the holder of this Note at the time of such surrender. The date the Company
initially issues this Note as set forth first above shall be deemed to be the
"Date of Issuance" hereof regardless of the number of times new notes
representing the rights formerly represented by this Note shall be issued.
IN WITNESS WHEREOF, this Note is executed as of the date first written
above.
POINTE COMMUNICATIONS CORPORATION
By:_______________________________________
Its:_______________________________________
PROMISSORY NOTE
---------------
$1,125,500 March 8, 1999
For value received, Pointe Communications Corporation, a Nevada corporation
(the "Maker") promises to pay to the order of EGL Equity Partners III, L.P., a
-----
Delaware limited partnership ("EGL") at such place as is designated in writing
---
by the holder of this Note, the aggregate principal sum of One Million One
Hundred Twenty Five Thousand Five Hundred Dollars and no cents ($1,125,500)
together with interest thereon calculated from the date hereof in accordance
with the provisions of this Note. The Maker's obligations under this Note shall
be senior to all of Maker's obligations under any of its unsecured indebtedness
(or guarantees of indebtedness).
1. Payment of Interest. Interest shall accrue on the outstanding
---------------------
principal amount of this Note at a rate equal to 10%. All accrued interest
shall be due and payable on the date on which the final principal amount on this
Note is paid. Interest will accrue on any principal payment due under this Note
and, to the extent permitted by applicable law, on any interest which has not
been paid on the date on which it is payable until such time as payment therefor
is actually delivered to the holder hereof.
2. Payment of Principal. The Maker shall repay the principal amount of
--------------------
$1,125,500 (or such lesser amount as may then be outstanding), together with all
accrued and unpaid interest thereon, to the holder hereof on the earlier of (i)
July 6, 1999, (ii) the date on which the Maker obtains permanent (i.e. repayment
or redemption of which is not required within one year) equity financing of at
least Five Million Dollars ($5,000,000.00) ("Permanent Financing"), or (iii) the
-------------------
date on which an Event of Default (as such term is defined in Section 4 hereof)
occurs. The Maker shall give written notice ten (10) business days prior to
consummating such Permanent Financing.
3. Prepayments. The Maker may, at any time and from time to time without
-----------
premium or penalty, prepay all or any portion of the outstanding principal
amount of this Note; provided that the Maker simultaneously pays all interest on
this Note accrued and unpaid through the date of such prepayment.
4. Events of Default. It shall be an "Event of Default" hereunder if the
-------------------
Maker shall (i) fail to repay when due any amounts owed hereunder or shall
otherwise breach any of its obligations under this Note, or under the Note and
Warrant Purchase Agreement or any other document, instrument or agreement
executed in connection herewith (collectively the "Loan Documents"), or if any
representation of warranty made by or on behalf of the Maker in the Loan
Documents shall have been false in any material respect when made, (ii) if the
Maker shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its assets,
or the Maker shall make a general assignment for the benefit of its creditors,
(iii) there shall be commenced against the Maker any case, proceeding or other
action of a nature referred to in clause (ii) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 15 days, (iv)
there shall be commenced against the Maker any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 15 days from entry
thereof, (v) the Maker shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth in
clause (ii), (iii) or (iv) above, or (vi) the Maker shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due.
5. Option. Upon receiving notice, EGL can elect by delivery of written
------
notice to the Maker to convert all or any portion of the principal or accrued
but unpaid interest of this Note into securities issued in connection with a
Permanent Financing or an independent equity financing; it being understood that
EGL shall have the right to participate in any such Permanent Financing or
independent equity financing and shall have the right to purchase each class of
securities offered in such Permanent Financing or independent equity financing
pro rata according to the amount invested in each such class.
6. Default Interest Rate. If the Maker fails to repay the principal
-----------------------
amount, and accrued but unpaid interest thereon, due hereunder in accordance
with the terms hereof, in addition to all of EGL's rights and remedies available
under applicable law, the interest rate on this Note shall increase immediately
by an increment of two (2) percentage points.
7. Cancellation. After all principal and accrued interest at any time
------------
owed on this Note has been paid in full, this Note shall be surrendered to the
Maker for cancellation and shall not be reissued.
8. Costs of Collection. In the event the Maker fails to pay any
---------------------
amounts due hereunder when due, the Maker shall pay to the holder hereof, in
addition to such amounts due, all costs of collection, including reasonable
attorneys' fees.
9. Waivers. The Maker, or its successors and assigns, hereby waives
-------
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Maker hereunder. In any
action on this Note, the holder hereof need not produce or file the original of
this Note, but need only file a photocopy of this Note certified by the holder
hereof to be a true and correct copy of this Note.
10. Remedies. All rights and remedies of EGL, whether provided for
--------
herein or conferred by law, are cumulative and concurrent and the exercise of
any one or more of them shall not preclude the simultaneous or later exercise by
EGL of any or all other rights, powers or remedies.
11. Notice. All notices, demands or other communications to be given
------
or delivered under or by reason of the provisions of this Note shall be in
writing and shall be deemed to have been given if (i) delivered personally to
the recipient, (ii) mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid or (iii) sent to the recipient by
reputable overnight courier services (charges prepaid).
If to EGL:
-----------
EGL Equity Partners III, L.P.
0000 Xxxxxxxx Xxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Fax Number (000) 000-0000
Confirm Number (000) 000-0000
with a copy, which will not constitute notice to EGL, to:
-------------------------------------------------------------------
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: B. Xxxx Xxxxx
Fax Number (000) 000-0000
Confirm Number (000) 000-0000
If to Pointe Communications Corporation:
--------------------------------------------
Pointe Communications Corporation
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Fax Number
Confirm Number (000) 000-0000
With a copy to
-----------------
Xxxxxxx X. Xxxxxxx, Xx.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Fax: 000-000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
All such notices, request, demands, waivers and other communications shall be
deemed to have been received (i) if by personal delivery on the date after such
delivery, (ii) if by certified or registered mail, on the seventh business day
after the mailing thereof and (iii) if by next-day or overnight mail or
delivery, on the day delivered.
12. Usury Laws. It is the intention of the Maker and the holder of
-----------
this Note to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to reduction to
the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated or
this Note is prepaid, whether by voluntary prepayment by the Maker or otherwise,
then earned interest may never include more than the maximum amount permitted by
law, computed from the date hereof until payment. If such interest does exceed
the maximum legal rate, it shall be deemed a mistake and such excess shall be
canceled automatically and, if theretofore paid, rebated to the Maker or
credited on the principal amount of this Note, or if this Note has been repaid,
then such excess shall be rebated to the Maker.
13. Governing Law. All questions concerning the construction, validity and
--------------
interpretation of this Note will be governed by and construed in accordance with
the domestic laws of the State of Georgia, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Georgia or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Georgia.
14. Note Transferable. This Note, the indebtedness evidenced hereby,
------------------
and all rights hereunder are transferable, in whole or in part, without charge,
upon surrender of this Note at the principal office of the Company for new notes
of like tenor representing in the aggregate the indebtedness hereunder, and each
of such new notes shall represent such portion of such rights as is designated
by the holder of this Note at the time of such surrender. The date the Company
initially issues this Note as set forth first above shall be deemed to be the
"Date of Issuance" hereof regardless of the number of times new notes
representing the rights formerly represented by this Note shall be issued.
IN WITNESS WHEREOF, this Note is executed as of the date first written
above.
POINTE COMMUNICATIONS CORPORATION
By:_______________________________________
Its:_______________________________________
PROMISSORY NOTE
---------------
$2,292,000 March 8, 1999
For value received, Pointe Communications Corporation, a Nevada corporation
(the "Maker") promises to pay to the order of EGL Equity Offshore Partners III,
-----
L.P., a Cayman Islands limited partnership ("EGL") at such place as is
---
designated in writing by the holder of this Note, the aggregate principal sum of
Two Million Two Hundred Ninety Two Thousand Dollars and no cents ($2,292,000)
together with interest thereon calculated from the date hereof in accordance
with the provisions of this Note. The Maker's obligations under this Note shall
be senior to all of Maker's obligations under any of its unsecured indebtedness
(or guarantees of indebtedness).
1. Payment of Interest. Interest shall accrue on the outstanding
---------------------
principal amount of this Note at a rate equal to 10%. All accrued interest
shall be due and payable on the date on which the final principal amount on this
Note is paid. Interest will accrue on any principal payment due under this Note
and, to the extent permitted by applicable law, on any interest which has not
been paid on the date on which it is payable until such time as payment therefor
is actually delivered to the holder hereof.
2. Payment of Principal. The Maker shall repay the principal amount of
--------------------
$2,292,000 (or such lesser amount as may then be outstanding), together with all
accrued and unpaid interest thereon, to the holder hereof on the earlier of (i)
July 6, 1999, (ii) the date on which the Maker obtains permanent (i.e. repayment
or redemption of which is not required within one year) equity financing of at
least Five Million Dollars ($5,000,000.00) ("Permanent Financing"), or (iii) the
-------------------
date on which an Event of Default (as such term is defined in Section 4 hereof)
occurs. The Maker shall give written notice ten (10) business days prior to
consummating such Permanent Financing.
3. Prepayments. The Maker may, at any time and from time to time without
-----------
premium or penalty, prepay all or any portion of the outstanding principal
amount of this Note; provided that the Maker simultaneously pays all interest on
this Note accrued and unpaid through the date of such prepayment.
4. Events of Default. It shall be an "Event of Default" hereunder if the
-------------------
Maker shall (i) fail to repay when due any amounts owed hereunder or shall
otherwise breach any of its obligations under this Note, or under the Note and
Warrant Purchase Agreement or any other document, instrument or agreement
executed in connection herewith (collectively the "Loan Documents"), or if any
representation of warranty made by or on behalf of the Maker in the Loan
Documents shall have been false in any material respect when made, (ii) if the
Maker shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its assets,
or the Maker shall make a general assignment for the benefit of its creditors,
(iii) there shall be commenced against the Maker any case, proceeding or other
action of a nature referred to in clause (ii) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 15 days, (iv)
there shall be commenced against the Maker any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 15 days from entry
thereof, (v) the Maker shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth in
clause (ii), (iii) or (iv) above, or (vi) the Maker shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due.
5. Option. Upon receiving notice, EGL can elect by delivery of written
------
notice to the Maker to convert all or any portion of the principal or accrued
but unpaid interest of this Note into securities issued in connection with a
Permanent Financing or an independent equity financing; it being understood that
EGL shall have the right to participate in any such Permanent Financing or
independent equity financing and shall have the right to purchase each class of
securities offered in such Permanent Financing or independent equity financing
pro rata according to the amount invested in each such class.
6. Default Interest Rate. If the Maker fails to repay the principal
-----------------------
amount, and accrued but unpaid interest thereon, due hereunder in accordance
with the terms hereof, in addition to all of EGL's rights and remedies available
under applicable law, the interest rate on this Note shall increase immediately
by an increment of two (2) percentage points.
7. Cancellation. After all principal and accrued interest at any time
------------
owed on this Note has been paid in full, this Note shall be surrendered to the
Maker for cancellation and shall not be reissued.
8. Costs of Collection. In the event the Maker fails to pay any
---------------------
amounts due hereunder when due, the Maker shall pay to the holder hereof, in
addition to such amounts due, all costs of collection, including reasonable
attorneys' fees.
9. Waivers. The Maker, or its successors and assigns, hereby waives
-------
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Maker hereunder. In any
action on this Note, the holder hereof need not produce or file the original of
this Note, but need only file a photocopy of this Note certified by the holder
hereof to be a true and correct copy of this Note.
10. Remedies. All rights and remedies of EGL, whether provided for
--------
herein or conferred by law, are cumulative and concurrent and the exercise of
any one or more of them shall not preclude the simultaneous or later exercise by
EGL of any or all other rights, powers or remedies.
11. Notice. All notices, demands or other communications to be given
------
or delivered under or by reason of the provisions of this Note shall be in
writing and shall be deemed to have been given if (i) delivered personally to
the recipient, (ii) mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid or (iii) sent to the recipient by
reputable overnight courier services (charges prepaid).
If to EGL:
-----------
EGL Equity Offshore Partners III, L.P.
0000 Xxxxxxxx Xxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Fax Number (000) 000-0000
Confirm Number (000) 000-0000
with a copy, which will not constitute notice to EGL, to:
-------------------------------------------------------------------
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: B. Xxxx Xxxxx
Fax Number (000) 000-0000
Confirm Number (000) 000-0000
If to Pointe Communications Corporation:
--------------------------------------------
Pointe Communications Corporation
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Fax Number
Confirm Number (000) 000-0000
With a copy to
-----------------
Xxxxxxx X. Xxxxxxx, Xx.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Fax: 000-000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
All such notices, request, demands, waivers and other communications shall be
deemed to have been received (i) if by personal delivery on the date after such
delivery, (ii) if by certified or registered mail, on the seventh business day
after the mailing thereof and (iii) if by next-day or overnight mail or
delivery, on the day delivered.
12. Usury Laws. It is the intention of the Maker and the holder of
-----------
this Note to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to reduction to
the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated or
this Note is prepaid, whether by voluntary prepayment by the Maker or otherwise,
then earned interest may never include more than the maximum amount permitted by
law, computed from the date hereof until payment. If such interest does exceed
the maximum legal rate, it shall be deemed a mistake and such excess shall be
canceled automatically and, if theretofore paid, rebated to the Maker or
credited on the principal amount of this Note, or if this Note has been repaid,
then such excess shall be rebated to the Maker.
13. Governing Law. All questions concerning the construction, validity and
--------------
interpretation of this Note will be governed by and construed in accordance with
the domestic laws of the State of Georgia, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Georgia or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Georgia.
14. Note Transferable. This Note, the indebtedness evidenced hereby,
------------------
and all rights hereunder are transferable, in whole or in part, without charge,
upon surrender of this Note at the principal office of the Company for new notes
of like tenor representing in the aggregate the indebtedness hereunder, and each
of such new notes shall represent such portion of such rights as is designated
by the holder of this Note at the time of such surrender. The date the Company
initially issues this Note as set forth first above shall be deemed to be the
"Date of Issuance" hereof regardless of the number of times new notes
representing the rights formerly represented by this Note shall be issued.
IN WITNESS WHEREOF, this Note is executed as of the date first written
above.
POINTE COMMUNICATIONS CORPORATION
By:_______________________________________
Its:_______________________________________
This Warrant was originally issued on March 8, 1999 and such issuance was not
registered under the Securities Act of 1933, as amended, or the securities laws
of any state. If reasonably requested by Company counsel, no transfer of this
Warrant shall be made except in connection with an opinion from Registered
Holder's counsel, acceptable to counsel for the Company, that such transfer is
exempt from federal and state registration.
POINTE COMMUNICATIONS CORPORATION
STOCK PURCHASE WARRANT
----------------------
Date of Issuance: March 8, 1999 Certificate No. W-__
FOR VALUE RECEIVED, Pointe Communications Corporation, a Nevada corporation
(the "Company"), hereby grants to EGL/Natwest Ventures USA, L.P., a Delaware
limited partnership, or its registered assigns (the "Registered Holder"), the
right to purchase from the Company 1,582,500 shares of the Company's Common
Stock at a price per share of $1.00 (as adjusted from time to time hereunder,
the "Exercise Price"). This Warrant is being granted to the Registered Holder
in connection with and, in consideration for the $1,582,500 loan the Registered
Holder is making to the Company contemporaneously with the issuance of this
Warrant. Certain capitalized terms used herein are defined in Section 5 hereof.
The amount and kind of securities obtainable pursuant to the rights granted
hereunder and the purchase price for such securities are subject to adjustment
pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
---------------------
1A. Exercise Period. The Registered Holder may exercise, in whole or
----------------
in part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time until the earlier
of (i) November 8, 1999, or (ii) the date in which the Registered Holder elects
to convert all of the principal and accrued but unpaid interest into securities
of the Company in accordance with Section 5 of that certain Promissory Note, of
even date herewith, issued by the Company in favor of the Registered Holder (the
"Exercise Period").
1B. Exercise Procedure.
-------------------
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C below,
executed by the Person exercising all or part of the purchase rights represented
by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser, an
Assignment or Assignments in the form set forth in Exhibit II hereto evidencing
----------
the assignment of this Warrant to the Purchaser, in which case the Registered
Holder shall have complied with the provisions set forth in Section 7 hereof;
and
(d) either (1) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise Price"), (2) the
surrender to the Company of debt or equity securities of the Company or any of
its wholly-owned Subsidiaries having a Market Price equal to the Aggregate
Exercise Price of the Common Stock being purchased upon such exercise (provided
that for purposes of this subparagraph, the Market Price of any note or other
debt security or any preferred stock shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof plus all
accrued and unpaid interest thereon or accrued or declared and unpaid dividends
thereon) or (3) a written notice to the Company that the Purchaser is exercising
the Warrant (or a portion thereof) by authorizing the Company to withhold from
issuance a number of shares of Common Stock issuable upon such exercise of the
Warrant which when multiplied by the Market Price of the Common Stock is equal
to the Aggregate Exercise Price (and such withheld shares shall no longer be
issuable under this Warrant).
(ii) Certificates for shares of Common Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
within five business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall within such five-day period, deliver
such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Common Stock. Each share of Common Stock issuable upon exercise of
this Warrant shall upon payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued Common
Stock acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of the holder hereof, be conditioned upon the
consummation of the public offering or sale of the Company in which case such
exercise shall not be deemed to be effective until the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange (except for "restricted stock" rules and requirements) upon which
shares of Common Stock may be listed (except for official notice of issuance
which shall be immediately delivered by the Company upon each such issuance).
The Company shall not take any action which would cause the number of
autho-rized but unissued shares of Common Stock to be less than the number of
such shares required to be reserved hereunder for issuance upon exercise of the
Warrants.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
-------------------
Exercise Agreement shall be substantially in the form set forth in Exhibit I
---------
hereto, except that if the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued, and if the number of shares of
Common Stock to be issued does not include all the shares of Common Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Such Exercise Agreement shall be dated the actual date of execution thereof.
1D. Fractional Shares. If a fractional share of Common Stock would,
------------------
but for the provisions of paragraph 1A, be issuable upon exercise of the rights
represented by this Warrant, the Company shall, within five business days after
the date of the Exercise Time, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the difference
between Market Price of such fractional share as of the date of the Exercise
Time and the Exercise Price of such fractional share.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to
-------------------------------------------------
prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance of
-------------------------------------------------------------------
Common Stock. If and whenever the Company issues or sells (except pursuant to
-------------
exercised options, warrants or similar instruments outstanding as of the date
hereof), or in accordance with paragraph 2B is deemed to have issued or sold,
any share of Common Stock for a consideration per share less than the Exercise
Price in effect immediately prior to such time, then immediately upon such issue
or sale the Exercise Price shall be reduced to the lowest net price per share at
which such share of Common Stock has been issued or sold or is deemed to have
been issued or sold. Upon each such adjustment of the Exercise Price hereunder,
the number of shares of Common Stock acquirable upon exercise of this Warrant
shall be adjusted to the number of shares determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------------
determining the adjusted Exercise Price under paragraph 2A, the following shall
be applicable:
(i) Issuance of Rights or Options. If subsequent to the date
---------------------------------
hereof the Company in any manner grants or sells any Options and the lowest
price per share for which any one share of Common Stock is issuable upon the
exercise of any such Option, or upon conversion or exchange of any Convertible
Security issuable upon exercise of such Option, is less than the Exercise Price
in effect immediately prior to the time of the granting or sale of such Option,
then such share of Common Stock shall be deemed to have been issued and sold by
the Company at such time for such price per share. For purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option and upon conversion or exchange of the Convertible Security. No further
adjustment of the Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Security upon the exercise of such Options
or upon the actual issue of such Common Stock upon conversion or exchange of
such Convertible Security.
(ii) Issuance of Convertible Securities. If subsequent to the
-------------------------------------
date hereof the Company in any manner issues or sells any Convertible Security
and the lowest price per share for which any one share of Common Stock is
issuable upon conversion or exchange thereof is less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then such share or
shares of Common Stock shall be deemed to have been issued and sold by the
Company at such time for such price per share. For the purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the issuance of the Convertible Security and upon the
conversion or exchange of such Convertible Security. No further adjustment of
the Exercise Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of any Convertible Security, and if any such issue or
sale of such Convertible Security is made upon exercise of any Options for which
adjustments of the Exercise Price had been or are to be made pursuant to other
provisions of this Section 2, no further adjustment of the Exercise Price shall
be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
------------------------------------------
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock changes at any time, the Exercise Price in effect at the time
of such change shall be adjusted immediately to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of shares of Common Stock
issuable hereunder shall be correspondingly adjusted. For purposes of this
paragraph 2B, if the terms of any Option or Convertible Security which was
outstanding as of the date of issuance of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such
change; provided that no such change shall at any time cause the Exercise Price
hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible
-------------------------------------------------------------
Securities. Upon the expiration of any Option or the termination of any right
----------
to convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect shall be adjusted immediately
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that no such change shall at any time cause the Exercise
Price hereunder to be increased.
(v) Calculation of Consideration Received. If any Common Stock,
---------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount received by the Company therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities shall be determined jointly by the
Company and the Registered Holders of the Warrants representing a majority of
the shares of Common Stock obtainable upon exercise of such Warrants. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an appraiser jointly selected by the Company
and the Registered Holders of Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of such Warrants. The determination of
such appraiser shall be final and binding on the Company and the Registered
Holders of the Warrants, and the fees and expenses of such appraiser shall be
paid by the Company.
(vi) Treasury Shares. The number of shares of Common Stock
----------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(vii) Record Date. If the Company takes a record of the holders
------------
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
2C. Subdivision or Combination of Common Stock. If the Company at any
-------------------------------------------
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2D. Reorganization, Reclassification, Consolidation, Merger or Sale.
------------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, is
referred to herein as "Organic Change." Prior to the consummation of any
Organic Change, the Company shall make appropriate provision to insure that each
of the Registered Holders of the Warrants shall thereafter have the right to
acquire and receive, in lieu of or addition to (as the case may be) the shares
of Common Stock immediately theretofore acquirable and receivable upon the
exercise of such holder's Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore acquirable and receivable upon exercise
of such holder's Warrant had such Organic Change not taken place. In any such
case, the Company shall make appropriate provision with respect to such holders'
rights and interests to insure that the provisions of this Section 2 and
Sections 3 and 4 hereof shall thereafter be applicable to the Warrants. The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets
assumes by appropriate written instrument the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
2E. Certain Events. If any event occurs of the type contemplated by
---------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants;
provided that no such adjustment shall increase the Exercise Price or decrease
the number of shares of Common Stock obtainable as otherwise determined pursuant
to this Section 2.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth the adjustment in reasonable detail and certifying the calculation of such
adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
Section 3. Purchase Rights. If at any time the Company grants, issues or
---------------
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then the Registered Holder of this Warrant
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 4. Definitions. The following terms have meanings set forth
-----------
below:
"Common Stock" means the Company's Common Stock, .00001 par value, and
-------------
except for purposes of the shares obtainable upon exercise of this Warrant, any
capital stock of any class of the Company hereafter authorized which is not
limited to a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon any liquidation, dissolution or winding up of the Company.
"Convertible Securities" means any stock or securities (directly or
-----------------------
indirectly) convertible into or exchangeable for Common Stock.
-
"Market Price" means as to any security the average of the closing prices
-------------
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading.
If at any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the Company
and the Registered Holders of Warrants representing a majority of the Common
Stock purchasable upon exercise of all the Warrants then outstanding; provided
that if such parties are unable to reach agreement within a reasonable period of
time, such fair value shall be determined by an appraiser jointly selected by
the Company and the Registered Holders of Warrants representing a majority of
the Common Stock purchasable upon exercise of all the Warrants then outstanding.
The determination of such appraiser shall be final and binding on the Company
and the Registered Holders of the Warrants, and the fees and expenses of such
appraiser shall be paid by the Company.
"Options" means any rights or options to subscribe for or purchase Common
-------
Stock or Convertible Securities.
"Person" means an individual, a partnership, a joint venture, a
------
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"The Warrant" or "this Warrant" means this Warrant and any other warrants
------------ ------------
exchanged directly or indirectly for all or a portion of this Warrant.
Other capitalized terms used in this Warrant but not defined herein shall
have the meanings set forth in the Purchase Agreement, dated as of the date
hereof, between the Company and the Registered Holder.
Section 5. No Voting Rights; Limitations of Liability. This Warrant shall
------------------------------------------
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 6. Warrant Transferable. Subject to the transfer conditions
---------------------
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit II hereto) at the principal office of the Company.
-----------
Section 7. Warrant Exchangeable for Different Denominations. This Warrant
------------------------------------------------
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
Section 8. Replacement. Upon receipt of evidence reasonably satisfactory
-----------
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 9. Notices. Except as otherwise expressly provided herein, all
-------
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered, sent or deposited in
the U.S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant, at such holder's address as it appears in
the records of the Company (unless otherwise indicated by any such holder).
Section 10. Amendment and Waiver. Except as otherwise provided herein,
----------------------
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of the Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of the Warrants; provided that no such
action may change the Exercise Price of the Warrants or the number of shares or
class of stock obtainable upon exercise of each Warrant without the written
consent of the Registered Holders of the Warrants.
Section 11. Descriptive Headings; Governing Law. The descriptive headings
-----------------------------------
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporation
laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and its Stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Georgia without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Georgia or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of Georgia.
* * * * * *
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
POINTE COMMUNICATIONS CORPORATION
By:
Its:
[Corporate Seal]
Attest:
______________________________
Title: ________________________
EXHIBIT I
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of
______ shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
Signature
Address
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, ______________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) with respect to the number of shares of the Common
Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
----------------- ------- -------------
Signature
---------------------
Witness
---------------------
This Warrant was originally issued on March 8, 1999 and such issuance was not
registered under the Securities Act of 1933, as amended, or the securities laws
of any state. If reasonably requested by Company counsel, no transfer of this
Warrant shall be made except in connection with an opinion from Registered
Holder's counsel, acceptable to counsel for the Company, that such transfer is
exempt from federal and state registration.
POINTE COMMUNICATIONS CORPORATION
STOCK PURCHASE WARRANT
----------------------
Date of Issuance: March 8, 1999 Certificate No. W-__
FOR VALUE RECEIVED, Pointe Communications Corporation, a Nevada corporation
(the "Company"), hereby grants to EGL Equity Partners III, L.P., a Delaware
limited partnership, or its registered assigns (the "Registered Holder"), the
right to purchase from the Company 1,125,500 shares of the Company's Common
Stock at a price per share of $1.00 (as adjusted from time to time hereunder,
the "Exercise Price"). This Warrant is being granted to the Registered Holder
in connection with and, in consideration for the $1,125,500 loan the Registered
Holder is making to the Company contemporaneously with the issuance of this
Warrant. Certain capitalized terms used herein are defined in Section 5 hereof.
The amount and kind of securities obtainable pursuant to the rights granted
hereunder and the purchase price for such securities are subject to adjustment
pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
---------------------
1A. Exercise Period. The Registered Holder may exercise, in whole or
----------------
in part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time until the earlier
of (i) November 8, 1999, or (ii) the date in which the Registered Holder elects
to convert all of the principal and accrued but unpaid interest into securities
of the Company in accordance with Section 5 of that certain Promissory Note, of
even date herewith, issued by the Company in favor of the Registered Holder (the
"Exercise Period").
1B. Exercise Procedure.
-------------------
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C below,
executed by the Person exercising all or part of the purchase rights represented
by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser, an
Assignment or Assignments in the form set forth in Exhibit II hereto evidencing
----------
the assignment of this Warrant to the Purchaser, in which case the Registered
Holder shall have complied with the provisions set forth in Section 7 hereof;
and
(d) either (1) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise Price"), (2) the
surrender to the Company of debt or equity securities of the Company or any of
its wholly-owned Subsidiaries having a Market Price equal to the Aggregate
Exercise Price of the Common Stock being purchased upon such exercise (provided
that for purposes of this subparagraph, the Market Price of any note or other
debt security or any preferred stock shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof plus all
accrued and unpaid interest thereon or accrued or declared and unpaid dividends
thereon) or (3) a written notice to the Company that the Purchaser is exercising
the Warrant (or a portion thereof) by authorizing the Company to withhold from
issuance a number of shares of Common Stock issuable upon such exercise of the
Warrant which when multiplied by the Market Price of the Common Stock is equal
to the Aggregate Exercise Price (and such withheld shares shall no longer be
issuable under this Warrant).
(ii) Certificates for shares of Common Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
within five business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall within such five-day period, deliver
such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Common Stock. Each share of Common Stock issuable upon exercise of
this Warrant shall upon payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued Common
Stock acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of the holder hereof, be conditioned upon the
consummation of the public offering or sale of the Company in which case such
exercise shall not be deemed to be effective until the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange (except for "restricted stock" rules and requirements) upon which
shares of Common Stock may be listed (except for official notice of issuance
which shall be immediately delivered by the Company upon each such issuance).
The Company shall not take any action which would cause the number of
autho-rized but unissued shares of Common Stock to be less than the number of
such shares required to be reserved hereunder for issuance upon exercise of the
Warrants.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
-------------------
Exercise Agreement shall be substantially in the form set forth in Exhibit I
---------
hereto, except that if the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued, and if the number of shares of
Common Stock to be issued does not include all the shares of Common Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Such Exercise Agreement shall be dated the actual date of execution thereof.
1D. Fractional Shares. If a fractional share of Common Stock would,
------------------
but for the provisions of paragraph 1A, be issuable upon exercise of the rights
represented by this Warrant, the Company shall, within five business days after
the date of the Exercise Time, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the difference
between Market Price of such fractional share as of the date of the Exercise
Time and the Exercise Price of such fractional share.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to
-------------------------------------------------
prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance of
-------------------------------------------------------------------
Common Stock. If and whenever the Company issues or sells (except pursuant to
-------------
exercised options, warrants or similar instruments outstanding as of the date
hereof), or in accordance with paragraph 2B is deemed to have issued or sold,
any share of Common Stock for a consideration per share less than the Exercise
Price in effect immediately prior to such time, then immediately upon such issue
or sale the Exercise Price shall be reduced to the lowest net price per share at
which such share of Common Stock has been issued or sold or is deemed to have
been issued or sold. Upon each such adjustment of the Exercise Price hereunder,
the number of shares of Common Stock acquirable upon exercise of this Warrant
shall be adjusted to the number of shares determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------------
determining the adjusted Exercise Price under paragraph 2A, the following shall
be applicable:
(i) Issuance of Rights or Options. If subsequent to the date
---------------------------------
hereof the Company in any manner grants or sells any Options and the lowest
price per share for which any one share of Common Stock is issuable upon the
exercise of any such Option, or upon conversion or exchange of any Convertible
Security issuable upon exercise of such Option, is less than the Exercise Price
in effect immediately prior to the time of the granting or sale of such Option,
then such share of Common Stock shall be deemed to have been issued and sold by
the Company at such time for such price per share. For purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option and upon conversion or exchange of the Convertible Security. No further
adjustment of the Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Security upon the exercise of such Options
or upon the actual issue of such Common Stock upon conversion or exchange of
such Convertible Security.
(ii) Issuance of Convertible Securities. If subsequent to the
-------------------------------------
date hereof the Company in any manner issues or sells any Convertible Security
and the lowest price per share for which any one share of Common Stock is
issuable upon conversion or exchange thereof is less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then such share or
shares of Common Stock shall be deemed to have been issued and sold by the
Company at such time for such price per share. For the purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the issuance of the Convertible Security and upon the
conversion or exchange of such Convertible Security. No further adjustment of
the Exercise Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of any Convertible Security, and if any such issue or
sale of such Convertible Security is made upon exercise of any Options for which
adjustments of the Exercise Price had been or are to be made pursuant to other
provisions of this Section 2, no further adjustment of the Exercise Price shall
be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
------------------------------------------
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock changes at any time, the Exercise Price in effect at the time
of such change shall be adjusted immediately to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of shares of Common Stock
issuable hereunder shall be correspondingly adjusted. For purposes of this
paragraph 2B, if the terms of any Option or Convertible Security which was
outstanding as of the date of issuance of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such
change; provided that no such change shall at any time cause the Exercise Price
hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible
-------------------------------------------------------------
Securities. Upon the expiration of any Option or the termination of any right
----------
to convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect shall be adjusted immediately
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that no such change shall at any time cause the Exercise
Price hereunder to be increased.
(v) Calculation of Consideration Received. If any Common Stock,
---------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount received by the Company therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities shall be determined jointly by the
Company and the Registered Holders of the Warrants representing a majority of
the shares of Common Stock obtainable upon exercise of such Warrants. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an appraiser jointly selected by the Company
and the Registered Holders of Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of such Warrants. The determination of
such appraiser shall be final and binding on the Company and the Registered
Holders of the Warrants, and the fees and expenses of such appraiser shall be
paid by the Company.
(vi) Treasury Shares. The number of shares of Common Stock
----------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(vii) Record Date. If the Company takes a record of the holders
------------
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
2C. Subdivision or Combination of Common Stock. If the Company at any
-------------------------------------------
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2D. Reorganization, Reclassification, Consolidation, Merger or Sale.
------------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, is
referred to herein as "Organic Change." Prior to the consummation of any
Organic Change, the Company shall make appropriate provision to insure that each
of the Registered Holders of the Warrants shall thereafter have the right to
acquire and receive, in lieu of or addition to (as the case may be) the shares
of Common Stock immediately theretofore acquirable and receivable upon the
exercise of such holder's Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore acquirable and receivable upon exercise
of such holder's Warrant had such Organic Change not taken place. In any such
case, the Company shall make appropriate provision with respect to such holders'
rights and interests to insure that the provisions of this Section 2 and
Sections 3 and 4 hereof shall thereafter be applicable to the Warrants. The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets
assumes by appropriate written instrument the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
2E. Certain Events. If any event occurs of the type contemplated by
---------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants;
provided that no such adjustment shall increase the Exercise Price or decrease
the number of shares of Common Stock obtainable as otherwise determined pursuant
to this Section 2.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth the adjustment in reasonable detail and certifying the calculation of such
adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
Section 3. Purchase Rights. If at any time the Company grants, issues or
---------------
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then the Registered Holder of this Warrant
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 4. Definitions. The following terms have meanings set forth
-----------
below:
"Common Stock" means the Company's Common Stock, .00001 par value, and
-------------
except for purposes of the shares obtainable upon exercise of this Warrant, any
capital stock of any class of the Company hereafter authorized which is not
limited to a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon any liquidation, dissolution or winding up of the Company.
"Convertible Securities" means any stock or securities (directly or
-----------------------
indirectly) convertible into or exchangeable for Common Stock.
"Market Price" means as to any security the average of the closing prices
-------------
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading.
If at any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the Company
and the Registered Holders of Warrants representing a majority of the Common
Stock purchasable upon exercise of all the Warrants then outstanding; provided
that if such parties are unable to reach agreement within a reasonable period of
time, such fair value shall be determined by an appraiser jointly selected by
the Company and the Registered Holders of Warrants representing a majority of
the Common Stock purchasable upon exercise of all the Warrants then outstanding.
The determination of such appraiser shall be final and binding on the Company
and the Registered Holders of the Warrants, and the fees and expenses of such
appraiser shall be paid by the Company.
"Options" means any rights or options to subscribe for or purchase Common
-------
Stock or Convertible Securities.
"Person" means an individual, a partnership, a joint venture, a
------
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"The Warrant" or "this Warrant" means this Warrant and any other warrants
------------ ------------
exchanged directly or indirectly for all or a portion of this Warrant.
Other capitalized terms used in this Warrant but not defined herein shall
have the meanings set forth in the Purchase Agreement, dated as of the date
hereof, between the Company and the Registered Holder.
Section 5. No Voting Rights; Limitations of Liability. This Warrant shall
------------------------------------------
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 6. Warrant Transferable. Subject to the transfer conditions
---------------------
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit II hereto) at the principal office of the Company.
-----------
Section 7. Warrant Exchangeable for Different Denominations. This Warrant
------------------------------------------------
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
Section 8. Replacement. Upon receipt of evidence reasonably satisfactory
-----------
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 9. Notices. Except as otherwise expressly provided herein, all
-------
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered, sent or deposited in
the U.S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant, at such holder's address as it appears in
the records of the Company (unless otherwise indicated by any such holder).
Section 10. Amendment and Waiver. Except as otherwise provided herein,
----------------------
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of the Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of the Warrants; provided that no such
action may change the Exercise Price of the Warrants or the number of shares or
class of stock obtainable upon exercise of each Warrant without the written
consent of the Registered Holders of the Warrants.
Section 11. Descriptive Headings; Governing Law. The descriptive headings
-----------------------------------
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporation
laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and its Stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Georgia without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Georgia or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of Georgia.
* * * * * *
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
POINTE COMMUNICATIONS CORPORATION
By:
Its:
[Corporate Seal]
Attest:
______________________________
Title: ________________________
EXHIBIT I
EXERCISE AGREEMENT
-------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of
______ shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
Signature
Address
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, ______________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) with respect to the number of shares of the Common
Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
----------------- ------- -------------
Signature
Witness
This Warrant was originally issued on March 8, 1999 and such issuance was not
registered under the Securities Act of 1933, as amended, or the securities laws
of any state. If reasonably requested by Company counsel, no transfer of this
Warrant shall be made except in connection with an opinion from Registered
Holder's counsel, acceptable to counsel for the Company, that such transfer is
exempt from federal and state registration.
POINTE COMMUNICATIONS CORPORATION
STOCK PURCHASE WARRANT
----------------------
Date of Issuance: March 8, 1999 Certificate No. W-__
FOR VALUE RECEIVED, Pointe Communications Corporation, a Nevada corporation
(the "Company"), hereby grants to EGL Equity Offshore Partners III, L.P., a
Cayman Islands limited partnership, or its registered assigns (the "Registered
Holder"), the right to purchase from the Company 2,292,000 shares of the
Company's Common Stock at a price per share of $1.00 (as adjusted from time to
time hereunder, the "Exercise Price"). This Warrant is being granted to the
Registered Holder in connection with and, in consideration for the $2,292,000
loan the Registered Holder is making to the Company contemporaneously with the
issuance of this Warrant. Certain capitalized terms used herein are defined in
Section 5 hereof. The amount and kind of securities obtainable pursuant to the
rights granted hereunder and the purchase price for such securities are subject
to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
---------------------
1A. Exercise Period. The Registered Holder may exercise, in whole or
----------------
in part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time until the earlier
of (i) November 8, 1999, or (ii) the date in which the Registered Holder elects
to convert all of the principal and accrued but unpaid interest into securities
of the Company in accordance with Section 5 of that certain Promissory Note, of
even date herewith, issued by the Company in favor of the Registered Holder (the
"Exercise Period").
1B. Exercise Procedure.
-------------------
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C below,
executed by the Person exercising all or part of the purchase rights represented
by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser, an
Assignment or Assignments in the form set forth in Exhibit II hereto evidencing
----------
the assignment of this Warrant to the Purchaser, in which case the Registered
Holder shall have complied with the provisions set forth in Section 7 hereof;
and
(d) either (1) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise Price"), (2) the
surrender to the Company of debt or equity securities of the Company or any of
its wholly-owned Subsidiaries having a Market Price equal to the Aggregate
Exercise Price of the Common Stock being purchased upon such exercise (provided
that for purposes of this subparagraph, the Market Price of any note or other
debt security or any preferred stock shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof plus all
accrued and unpaid interest thereon or accrued or declared and unpaid dividends
thereon) or (3) a written notice to the Company that the Purchaser is exercising
the Warrant (or a portion thereof) by authorizing the Company to withhold from
issuance a number of shares of Common Stock issuable upon such exercise of the
Warrant which when multiplied by the Market Price of the Common Stock is equal
to the Aggregate Exercise Price (and such withheld shares shall no longer be
issuable under this Warrant).
(ii) Certificates for shares of Common Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
within five business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall within such five-day period, deliver
such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Common Stock. Each share of Common Stock issuable upon exercise of
this Warrant shall upon payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued Common
Stock acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of the holder hereof, be conditioned upon the
consummation of the public offering or sale of the Company in which case such
exercise shall not be deemed to be effective until the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange (except for "restricted stock" rules and requirements) upon which
shares of Common Stock may be listed (except for official notice of issuance
which shall be immediately delivered by the Company upon each such issuance).
The Company shall not take any action which would cause the number of
autho-rized but unissued shares of Common Stock to be less than the number of
such shares required to be reserved hereunder for issuance upon exercise of the
Warrants.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
-------------------
Exercise Agreement shall be substantially in the form set forth in Exhibit I
---------
hereto, except that if the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued, and if the number of shares of
Common Stock to be issued does not include all the shares of Common Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Such Exercise Agreement shall be dated the actual date of execution thereof.
1D. Fractional Shares. If a fractional share of Common Stock would,
------------------
but for the provisions of paragraph 1A, be issuable upon exercise of the rights
represented by this Warrant, the Company shall, within five business days after
the date of the Exercise Time, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the difference
between Market Price of such fractional share as of the date of the Exercise
Time and the Exercise Price of such fractional share.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to
-------------------------------------------------
prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance of
-------------------------------------------------------------------
Common Stock. If and whenever the Company issues or sells (except pursuant to
-------------
exercised options, warrants or similar instruments outstanding as of the date
hereof), or in accordance with paragraph 2B is deemed to have issued or sold,
any share of Common Stock for a consideration per share less than the Exercise
Price in effect immediately prior to such time, then immediately upon such issue
or sale the Exercise Price shall be reduced to the lowest net price per share at
which such share of Common Stock has been issued or sold or is deemed to have
been issued or sold. Upon each such adjustment of the Exercise Price hereunder,
the number of shares of Common Stock acquirable upon exercise of this Warrant
shall be adjusted to the number of shares determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------------
determining the adjusted Exercise Price under paragraph 2A, the following shall
be applicable:
(i) Issuance of Rights or Options. If subsequent to the date
---------------------------------
hereof the Company in any manner grants or sells any Options and the lowest
price per share for which any one share of Common Stock is issuable upon the
exercise of any such Option, or upon conversion or exchange of any Convertible
Security issuable upon exercise of such Option, is less than the Exercise Price
in effect immediately prior to the time of the granting or sale of such Option,
then such share of Common Stock shall be deemed to have been issued and sold by
the Company at such time for such price per share. For purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option and upon conversion or exchange of the Convertible Security. No further
adjustment of the Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Security upon the exercise of such Options
or upon the actual issue of such Common Stock upon conversion or exchange of
such Convertible Security.
(ii) Issuance of Convertible Securities. If subsequent to the
-------------------------------------
date hereof the Company in any manner issues or sells any Convertible Security
and the lowest price per share for which any one share of Common Stock is
issuable upon conversion or exchange thereof is less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then such share or
shares of Common Stock shall be deemed to have been issued and sold by the
Company at such time for such price per share. For the purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the issuance of the Convertible Security and upon the
conversion or exchange of such Convertible Security. No further adjustment of
the Exercise Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of any Convertible Security, and if any such issue or
sale of such Convertible Security is made upon exercise of any Options for which
adjustments of the Exercise Price had been or are to be made pursuant to other
provisions of this Section 2, no further adjustment of the Exercise Price shall
be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
------------------------------------------
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock changes at any time, the Exercise Price in effect at the time
of such change shall be adjusted immediately to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of shares of Common Stock
issuable hereunder shall be correspondingly adjusted. For purposes of this
paragraph 2B, if the terms of any Option or Convertible Security which was
outstanding as of the date of issuance of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such
change; provided that no such change shall at any time cause the Exercise Price
hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible
-------------------------------------------------------------
Securities. Upon the expiration of any Option or the termination of any right
----------
to convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect shall be adjusted immediately
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that no such change shall at any time cause the Exercise
Price hereunder to be increased.
(v) Calculation of Consideration Received. If any Common Stock,
---------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount received by the Company therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities shall be determined jointly by the
Company and the Registered Holders of the Warrants representing a majority of
the shares of Common Stock obtainable upon exercise of such Warrants. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an appraiser jointly selected by the Company
and the Registered Holders of Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of such Warrants. The determination of
such appraiser shall be final and binding on the Company and the Registered
Holders of the Warrants, and the fees and expenses of such appraiser shall be
paid by the Company.
(vi) Treasury Shares. The number of shares of Common Stock
----------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(vii) Record Date. If the Company takes a record of the holders
------------
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
2C. Subdivision or Combination of Common Stock. If the Company at any
-------------------------------------------
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2D. Reorganization, Reclassification, Consolidation, Merger or Sale.
------------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, is
referred to herein as "Organic Change." Prior to the consummation of any
Organic Change, the Company shall make appropriate provision to insure that each
of the Registered Holders of the Warrants shall thereafter have the right to
acquire and receive, in lieu of or addition to (as the case may be) the shares
of Common Stock immediately theretofore acquirable and receivable upon the
exercise of such holder's Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore acquirable and receivable upon exercise
of such holder's Warrant had such Organic Change not taken place. In any such
case, the Company shall make appropriate provision with respect to such holders'
rights and interests to insure that the provisions of this Section 2 and
Sections 3 and 4 hereof shall thereafter be applicable to the Warrants. The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets
assumes by appropriate written instrument the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
2E. Certain Events. If any event occurs of the type contemplated by
---------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants;
provided that no such adjustment shall increase the Exercise Price or decrease
the number of shares of Common Stock obtainable as otherwise determined pursuant
to this Section 2.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth the adjustment in reasonable detail and certifying the calculation of such
adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
Section 3. Purchase Rights. If at any time the Company grants, issues or
---------------
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then the Registered Holder of this Warrant
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 4. Definitions. The following terms have meanings set forth
-----------
below:
"Common Stock" means the Company's Common Stock, .00001 par value, and
-------------
except for purposes of the shares obtainable upon exercise of this Warrant, any
capital stock of any class of the Company hereafter authorized which is not
limited to a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon any liquidation, dissolution or winding up of the Company.
"Convertible Securities" means any stock or securities (directly or
-----------------------
indirectly) convertible into or exchangeable for Common Stock.
-
"Market Price" means as to any security the average of the closing prices
-------------
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading.
If at any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the Company
and the Registered Holders of Warrants representing a majority of the Common
Stock purchasable upon exercise of all the Warrants then outstanding; provided
that if such parties are unable to reach agreement within a reasonable period of
time, such fair value shall be determined by an appraiser jointly selected by
the Company and the Registered Holders of Warrants representing a majority of
the Common Stock purchasable upon exercise of all the Warrants then outstanding.
The determination of such appraiser shall be final and binding on the Company
and the Registered Holders of the Warrants, and the fees and expenses of such
appraiser shall be paid by the Company.
"Options" means any rights or options to subscribe for or purchase Common
-------
Stock or Convertible Securities.
"Person" means an individual, a partnership, a joint venture, a
------
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"The Warrant" or "this Warrant" means this Warrant and any other warrants
------------ ------------
exchanged directly or indirectly for all or a portion of this Warrant.
Other capitalized terms used in this Warrant but not defined herein shall
have the meanings set forth in the Purchase Agreement, dated as of the date
hereof, between the Company and the Registered Holder.
Section 5. No Voting Rights; Limitations of Liability. This Warrant shall
------------------------------------------
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 6. Warrant Transferable. Subject to the transfer conditions
---------------------
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit II hereto) at the principal office of the Company.
-----------
Section 7. Warrant Exchangeable for Different Denominations. This Warrant
------------------------------------------------
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
Section 8. Replacement. Upon receipt of evidence reasonably satisfactory
-----------
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 9. Notices. Except as otherwise expressly provided herein, all
-------
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered, sent or deposited in
the U.S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant, at such holder's address as it appears in
the records of the Company (unless otherwise indicated by any such holder).
Section 10. Amendment and Waiver. Except as otherwise provided herein,
----------------------
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of the Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of the Warrants; provided that no such
action may change the Exercise Price of the Warrants or the number of shares or
class of stock obtainable upon exercise of each Warrant without the written
consent of the Registered Holders of the Warrants.
Section 11. Descriptive Headings; Governing Law. The descriptive headings
-----------------------------------
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporation
laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and its Stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Georgia without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Georgia or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of Georgia.
* * * * * *
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
POINTE COMMUNICATIONS CORPORATION
By:
Its:
[Corporate Seal]
Attest: ________________________
Title: ________________________
EXHIBIT I
EXERCISE AGREEMENT
-------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of
______ shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
Signature
Address
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, ______________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) with respect to the number of shares of the Common
Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
----------------- ------- -------------
Signature
Witness
